APRA authorises new foreign bank

The Australian Prudential Regulation Authority (APRA) has announced that it has authorised China Everbright Bank as a foreign authorised deposit-taking institution (ADI).

The news follows a recent analysis of the commercial real-estate (CRE) market by APRA, with the regulator noting the rise in lending activity from the foreign bank branch sector, particularly those based in Asia.

In its analysis, APRA stated that major banks “continue to be the main lenders to the Australian CRE industry”, with the foreign bank branch sector the second-largest CRE credit provider.

APRA added that the foreign bank branch sector has been “growing rapidly” and has exposure levels “greater than other domestically owned banks and foreign bank subsidiaries combined”.

According to APRA, before the global financial crisis, foreign banks (subsidiaries and branches combined) lent approximately 20 per cent of all Australian CRE credit.

APRA stated that the GFC saw the exit of many European bank branch operations from Australia and an associated reduction in their CRE lending.

However, the regulator observed that over the past four years, there has been a “resurgence” in foreign branch bank CRE lending activity, spurred by Asian-based lenders.

APRA said: “Asian-based banks have driven the foreign bank sector’s lending to CRE back to – and above – pre-global financial crisis levels.”

The authorisation of China Everbright Bank follows the approval of a restricted ADI licence for Australian-based ‘neobank’ Xinja, which became the second neobank to receive a restricted banking licence, after the prudential regulator granted the first licence of its kind to volt Bank in May.

[Related: APRA grants banking licence to neobank]