Is Asia the Panacea to Limited Growth in Australia for the Big Four Banks?
The big four Australian banks are struggling to achieve real growth in oligopolistic market conditions; essentially swapping institutional clients and chasing limited deposit and lending growth opportunities.
That means that they need to look further afield to try to achieve analyst pleasing 5-7% year on year growth. NAB’s failed European adventure (Clydesdale Bank and Yorkshire Building Society) has highlighted, more than anything else, that cross-border global banking is the solution with
ANZ, CBA, Westpac and NAB have representation in
Australian banks, excluding ANZ, have a lack of credentials in the global IB market. Morgan Stanley, JP Morgan, UBS, Deutsche Bank, Credit Suisse and Goldman Sachs etc are established players with the capital, reputation, truly global footprint and distribution channels to support continued growth in
Australian banks, of which only one – CBA – is in the top 10, also suffer from a lack of depth and experience in the market. HSBC and Standard Chartered Bank have strong deep relationships with
Interestingly, it was announced yesterday that ANZ and Westpac have just been granted the ability to directly convert AUD to Yuan removing the need to first convert AUD to USD then Yuan which will help to facilitate trade and increase margins by reducing costs.
One way in which the Australian banks have tried to overcome their lack of depth in the Asian market is through the JV model, buying stakes in local institutions in order to capitalise on their existing customer base and distribution channels. ANZ and CBA have been successful in this endeavour while NAB has chosen to focus on trying to augment their local institutional banking offering with providing access to asset and project finance opportunities in
The JV model has many inherent risks specifically in
The expansion of Australian banks’ retail banking, wealth management and retail insurance divisions represent an opportunity for our banks to make inroads into the Asian market.
Over the next few weeks, these similar yet divergent strategies will be explored bank by bank followed by a comparison and analysis of the strengths, weaknesses, risks and opportunities that are and will be afforded to the leading Australian banking groups.