Big Banks Warned On Expansion in Asia

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A search for new areas of growth has seen the country’s big banks throw a lot of weight behind their expansions into greater Asia, but Australia’s central bank has reminded them to be aware of the pitfalls.

In its recent Financial Stability Review the Reserve Bank of Australia said that the push into Asia, which has been led by ANZ, would probably benefit Australia’s financial system thanks to the profits they reap.

But it reminded them that “moving into any new market poses a range of risks that banks need to manage carefully”.

“These risks would probably be heightened if expansion were overly rapid and not backed by a deliberate and well-founded strategy,” the RBA warned.

The exposures of all Australian-owned banks on the Asian region were $112 billion at December 2012, up from $27 billion five years earlier, said the RBA’s report.

“Almost all of these claims are due to the four major banks.”

Read the full report here.

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