Wednesday, 20 September 2017 Sydney
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AUSTRALIA – BANKING & FINANCE::

The private banking industry in Australia has benefited from almost 20 years of sustained economic growth to become the third largest private wealth market in the Asia-Pacific and the 10th largest in the world, according to Capgemini and Merrill Lynch’s 2010 World Wealth Report.

 

Strategically, Australia offers a competitive regional location for providing wealth management services and is distinguished by the strength and resilience of its economy, the size, depth and liquidity of its financial markets and the sophisticated and innovative nature of its funds management sector, underpinned by its mandatory retirement income policy. This, together with an open, transparent, best practice regulatory environment, favorable changes in taxation system and skilled multilingual financial professionals, makes Australia an attractive destination for investment.

 

The Investment Banking and Securities Broking industry has passed through a turbulent time in Australia, mirroring the world situation. The arrival of the subprime crisis in early 2008 heralded plummeting share markets, a rise in borrowing costs and a fall in corporate activity. It also delivered two years of double-digit revenue decline. Macquarie reported their first drop in profits in over 17 years and Babcock & Brown ended up in the hands of administrators. A number of securities broking firms either collapsed or were acquired. In 2009-10 the industry is on the rebound.

 

 

TRENDS


 

  • Downward Trending: The state of the Investment Management Industry continued its trend downwards from the second half of 2008. Total superannuation assets, which passed $1 trillion two years ago now look set to fall below this figure by the end of the global financial crisis.

 

 

  • Growth of High Net Worth Individuals (HNWI) in Australia and Asia-Pacific: Despite weakness in the world economy in 2009, the global high net worth individuals grew 17.1% to 10 million, nearly recovering the unprecedented declines of 2008. HNWI wealth also grew, posting a gain of 18.9% to $39 trillion. The Asia-Pacific HNWI population rose 25.8% to 3.0 million catching up with Europe for the first time. The HNWI population in Australia rose by 34.4% to 173,600 making it the strongest rebound among the world’s12 largest HNWI economies. Despite its relatively small population, Australia’s pool of affluent individuals is bigger than those of Brazil (146,700), Russia (117,700), India (126,700) and 36% of China’s total. The growth in the number of HNWI has created stronger demand in Australia for specialized private banking services in investment advice and risk management, insurance, superannuation, taxation advice and general banking services. 

 

 

  • Polarization of the Market: The global trend of polarization of the market between large, branded fund managers and niche institutional managers, such as hedge funds, is mirrored in Asia Pacific. 

 

KEY FORECASTS

 

 

Ratings agency Moody's Investors Services says it has a stable outlook for the Australian banking system, with signs bad debt provisions are peaking. Moody's says its outlook on Australian banks is due to the "relatively sound prospects for the domestic economy, improved conditions and signs that bad debt provisioning is peaking." Moody's senior vice president Patrick Winsbury said Australia's banks had emerged from the global financial crisis in a strong position compared to many developed markets.

 

INDUSTRY DEVELOPMENTS

 

 

Foreign mutual firms seem to be recognizing the need for local presence and many now have managers, research analysts and distribution operations in the Asia Pacific region.

 

MARKET SIZE

 

 

Australia’s key industry figures for the investment banking and securities brokerage market (2009) are as follows:

 

Key Industry Figures 

2009 

Industry Revenue

7,805 $ million

Revenue Growth

-19.5 %

Industry Gross Product

4,370.8 $ million

Number of Establishments

1,530 Units

Number of Enterprises

219      Units

Employment

16,592 Units

Exports

--

Imports

--

Total Wages

3,356.1  

                                                                                               

  Australia’s key industry figures for the funds management market (2009) are as follows:

 

Key Industry Figures 

2009

Industry Revenue

3,661.4 $ million

Revenue Growth

-23%

Industry Gross Product

1,354.7 $ million

Number of Establishments

131 Units

Number of Enterprises

128 Units

Employment

6,127 People

Exports

--

Imports

--

Total Wages

732.3 $ million

 

KEY PLAYERS

 

 

Macquarie Group Limited     

Goldman Sachs & Partners Australia Pty Ltd           

UBS Holdings Pty Ltd          

Deutsche Australia Limited   

Citigroup Global Markets Australia Holdings Pty Limited

 

GROWTH FIGURES AND FDI FIGURES

 

 

Funds management in Australia is big business. Australians have the highest average per capita investment in managed funds in the world. The Australian funds management industry is the fourth largest in the world, and the largest in Asia. Much of these funds come from superannuation, the strong growth of which is underpinned by government policies. Funds under management (FUM) in this industry, which excludes assets held by superannuation funds, are expected reach around $672.5 billion at June 2011.

 

Stock of Foreign Direct Investment in Australia by Industry:

 

Industry  

$ million

% share of total

Agriculture, forestry and fishing

700

0.2

Mining

99,659

25.4

Manufacturing

73,848

18.8

Electricity, gas and water

16,105

4.1

Construction

13,037

3.3

Wholesale and retail trade

57,093

14.5

Accommodation, cafes and restaurants  

914

0.2

Transport and communication

25,929

6.6

Finance and insurance  

53,143

13.5

Property and business services

33,830

8.6

Other services

6,105

1.6

Unallocated

12,500

3.2

Total

392,862

100

 

 

RECENT DEALS

 

 

Life insurance company Tower Australia Ltd (TAL.AX) met with investors this week for first time ahead of a possible bond issue, a fund manager said on Wednesday. The Australian dollar offer debut is not seen as imminent as the firm does not have credit ratings yet, the fund manager said.


INVESTMENT OPPORTUNITIES


Fund and asset management. Note: Australians have the highest average per capita investment in managed funds in the world.

 

RESOURCES: INDUSTRY GROUPS AND ORGANIZATIONS

 

Australian Banker’s Association (ABA) works with its members to provide analysis, advice and advocacy and contributes to the development of public policy on banking and other financial services.. http://www.bankers.asn.au

 

The Financial Services Council (FSC) is the peak body representing Australia’s retail and wholesale funds management, superannuation and life insurance industries, http://www.ifsa.com.au.

 

Investment Management Consultants Association (IMCA) is the only professional association to address the specific needs and concerns of the investment consulting community, http://www.imca.org.au/mainPage.php?id=5.

 

 

 

 

Current Investment Opportunities in Australia:

 

For current investment opportunities in Australia, please click here :   http://investinaustralia.com/current-opportunities

 

 

 

 

 

REFERENCES

  1. Unknown, “Data Alert: Australia Now 10th Largest Private Banking Market in the world”, Australian Trade Commission, June 2010, http://www.austrade.gov.au/Invest/Investor-Updates/100629-Data-Alert-Australia-Now-10th-Largest-Private-Banking-Market-in-the-world/default.aspx.
  2. Editors, “Investment Banking & Securities Brokerage in Australia”, IbisWorld, 2010, http://www.ibisworld.com.au/industry/default.aspx?indid=1820.
  3. Editors, “State of the Investment Management Industry in Australia & New Zealand”, KPMG, June 2009, http://www.kpmg.com/AU/en/IssuesAndInsights/.../SIMI-Jan-Jun09.pdf.
  4. Unknown, “Data Alert: Australia Now 10th Largest Private Banking Market in the world”, Australian Trade Commission, June 2010, http://www.austrade.gov.au/Invest/Investor-Updates/100629-Data-Alert-Australia-Now-10th-Largest-Private-Banking-Market-in-the-world/default.aspx.
  5. Unknown, “Australia’s Growing Market for Private Banking Driven by Strong Growth”, Australian Trade Commission, June 2010, http://docs.google.com/viewer?a=v&q=cache:mu4qCeGJSFUJ:www.germany.embassy.gov.au/files/beln/240610 Media release Private Banking 2010.pdf+australia%27s+market+for+banking+driven+by+strong+growth&hl=en&gl=us&pid=bl&srcid=ADGEEShJPb2Yuth.
  6. Editors, “State of the Investment Management Industry in Asia Pacific”, KPMG, 2010, http://www.kpmg.com.hk/redirect.asp?id=8766.
  7. Editors, “Stable outlook for Australian banking system”, Business Spectator, April 2010, http://www.businessspectator.com.au/bs.nsf/Article/Stable-outlook-for-Australian-banking-system-Moody-pd20100415-4HUMX?OpenDocument&src=tnb.
  8. Editors, “State of the Investment Management Industry in Asia Pacific”, KPMG, 2010, http://www.kpmg.com.hk/redirect.asp?id=8766.
  9. Editors, “Investment Banking & Securities Brokerage in Australia”, IbisWorld, July 2010, http://www.ibisworld.com.au/industry/default.aspx?indid=1820.
  10. Editors, “Funds Management in Australia”, IbisWorld, October 2010, http://www.ibisworld.com.au/industry/default.aspx?indid=1822.
  11. Editors, “Funds Management in Australia”, IbisWorld, October 2010, http://www.ibisworld.com.au/industry/default.aspx?indid=1822.
  12. Unknown, “Tower Australia mulls A$ bond, meets investors-fund”, Reuters, October 2010, http://www.reuters.com/article/idUSSGE69C01020101013.