Aussie banks investing massively in Asia

Australia’s cash flush banks’ holdings of Asian assets jump 315% since 2008.

The Reserve Bank of Australia, the central bank, said the exposure of Australian-owned banks in Asian countries rose from A$27 billion in late 2007 to A$112 billion in December 2012 due mostly to the withdrawal of struggling European banks from Asia.

"The bulk of Australian banks' exposures are to the financial centers of Singapore and Hong Kong, as well as China and Japan, the two largest economies in the region," said an RBA report

"ANZ has accounted for a large part of the growth and its overall exposure to Asia is much bigger than those of the other banks," the report said. Other major Aussie banks, however, have limited themselves to cross border banking services such as trade finance and foreign exchange.

The Aussie banks' larger Asian reach is due to their expanding business ties with Asian firms looking to invest in Australia and from Australian and foreign corporations expanding their operations in Asia.

Asian banks' interest in Australia have also grown, especially in the syndicated loan market where Asian lenders' now have 23% of the local market, up from 13% five years ago. Over the same period their share of the larger Australian business loan market rose from 3% to 5%.