Westpac earns $1.5bn in residential mortgage securities

Australia’s top 4 banks, which include Westpac, hold $1tn loans portfolio in mortgages.

Westpac Banking Corp, Australia's third-largest lender, raised A$1.6 billion ($1.51 billion) on Wednesday in residential mortgage backed securities, increasing the size of the deal from an original plan to raise A$1 billion.

The transaction, for which Westpac was the sole arranger, follows a A$1.5 billion raising by top lender National Australia Bank last month.

Australian banks rely heavily on offshore credit markets for their funding, but these markets have become frozen because of the European debt crisis, forcing them to turn to other sources of funding such as asset-backed securities, according to a report in Reuters.

The country's four major banks hold $1 trillion or 60 percent of their loans portfolio in mortgages, making it easy for them to issue top-rated residential mortgage backed paper.