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Strong growth from foreign banks in 2019 pointed to positive investment trends in Australia. But how have emerging market issues in 2020, such as the COVID-19 pandemic, interrupted these patterns? Our report explores the highlights of 2019 and considers what the future may bring.
Our Foreign Bank Tracker report, now in its fifth year, reveals capital flow trends into Australia via foreign banks. This is based on Australian Prudential Regulation Authority (APRA) statistics.
Data from 2019 pointed to a continued expansion of foreign banks in our domestic marketplace. However, emerging market issues are set to have a major impact on capital flow into Australia throughout 2020 and beyond. We're seeing the unprecedented impacts of the COVID-19 pandemic, which has hit banks via travel restrictions and disruptions, the need to quarantine individuals, supply and demand disruption and cashflow volatility for many businesses.
In addition, reduced oil prices and climate change concerns, exacerbated by the Australian bushfire crisis, have provided additional challenges for investors.
“While the long terms impacts are yet to be seen, as countries start to recover and stabilise, we anticipate a flurry of activity as funds look to invest in businesses.”
Following a prolonged period of quiet and uncertainty, our report illustrates that European banks stood out last year with a 24% rate of growth – the highest of all the regions. With renewed confidence and certainty following Brexit, European – and particularly UK-based investors – were poised for action, and keen to look further afield.
These ambitions are currently taking a hit as the COVID-19 pandemic slows investment right down, but longer term, we anticipate the opportunities will still be there.
Asian bank growth continued its pattern of acceleration, increasing to a 17% rate of growth in 2019. Our report shows that Asia is a consistently strong investor in Australia, and with 28 Asian banks operating in Australia, all Asian countries grew resident assets at effectively double digit growth rates.
Notwithstanding the current slowdown, this points to a positive longer term trend regarding Asian investment in Australia.
Our report examines the foreign bank data and capital flow trends from countries around the world. In particular, we focus on Germany, France, the Netherlands, Switzerland, the United Kingdom, Mainland China, Taiwan, Japan, Singapore, India, South Korea, the United States and Canada.
John Elias is a highly regarded specialist in structured finance and debt capital markets. He has recognised expertise in market-leading finance transactions for domestic and international banks, financial institutions and major corporations.
An extensive career in the professional services industry has enabled me to build a reputation as a leading adviser to major banks and financial institutions in Australia and Canada.
© 2020 MinterEllison
