Table of Contents

Research Handbook on Crisis Management in the Banking Sector

Research Handbook on Crisis Management in the Banking Sector

Research Handbooks in Financial Law series

Edited by Matthias Haentjens and Bob Wessels

In this timely Handbook, over 30 prominent academics, practitioners and regulators from across the globe provide in-depth insights into an area of law that the recent global financial crisis has placed in the spotlight: bank insolvency law.

Chapter 18: Australia

Rosalind Mason and Michael Murray

Subjects: economics and finance, financial economics and regulation, money and banking, law - academic, company and insolvency law, finance and banking law

Extract

Crisis management in the banking sector is a topical issue in Australia. This is not because financial institutions are facing a financial crisis. Indeed, the International Monetary Fund (IMF) noted that ‘Australia has a history of few bank failures, even fewer financial crises, and its banking sector emerged from the global financial crisis relatively well. Rather, crisis management of banks is topical because there has been the first full review of Australia’s banking and financial system in nearly 20 years, which has examined and raised issues about the resilience and capacity of the Australian regime in this post GFC world. At the time of writing, the Report’s recommendations, including for Australian banks to meet capital standards in line with emerging international practice, are the subject of industry debate in advance of the Australian government’s decision. The Financial System Inquiry Report (FSI Report) was handed down in December 2014, following an Interim Report of July 2014 (Interim FSI Report).3 The Inquiry followed the 2012 release of a government Consultation Paper on strengthening the prudential regulator’s crisis management powers over banks – formally termed ‘authorised deposit-taking institutions’, or ADIs. The last major inquiry into Australia’s financial system was the 1997 Financial System Inquiry report (commonly known as the Wallis Report) upon which Australia’s financial system has since largely been based. In 2008, during the height of the global financial crisis (GFC), some Australian banks experienced funding pressures, but there were no failures.

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