Australia’s big 4 banks “almost too big to get sick”

Australia’s banking regulator has expressed “perpetual concern” about the dominance of Australia’s big four banks in the lending market.

Charles Littrell, Australian Prudential Regulation Authority (APRA) supervision general manager told a Centre for International Finance and Regulation showcase event on Thursday, “In 1990, the four major banks had 40 per cent of the banking market; now they’ve got 80 per cent”

“They’re all in the same business model, they’re all hugely ­exposed to each other … and we don’t quite know what would happen if that business model gets whacked by external stress all at once.”

The warning is timely given Britain’s decision to exit the EU today, shaking global finance markets.

Also of concern by the regulator is the big four’s exposure to residential housing loans. “It is a significant issue of concern to us that close to two-thirds of balance sheets are exposed to property…mainly housing loans,”

Australia has the highest level of household debt in the world.

It is expected the regulator will impose greater capital requirements in the next wave of reforms due by the end of the year.

In 2012, the International Monetary Fund (IMF) highlighted identical concerns about the concentration and interconnectedness of Australia’s big four banks. (‘Too big to fail‘).

Under a stress test scenario conducted by APRA in 2014, the big four banks would have been insolvent if they were unable to access further capital, highlighting the need to bolster the banks with further capital. (‘Have the Big 4 just flunked APRA’s stress test?‘)

» Surprise jolt could bring down big four banks, says regulator APRA – The Herald Sun, 24th June 2016.
» Regulator dials up pressure on banks’ real estate lending – The Australian, 24th June 2016.
» IMF: Bank capital needs to be ‘substantially higher’ to prevent banking crisis – Who crashed the economy?, 24th June 2015.


  1. Too big to fail must be the stupidest thing anyone could say in the wake of Lehmann Bros – they were amongst the biggest.

  2. Who cares what these authorities say, they’ll do nothing substantial about it and the inevitable will happen. And I’ll sit back with a big smile as all the suckers’ arrogance evaporates along with their “wealth effect”.

    The Brexit is another example of what I believe and that is “They never predict the thing that brings everything to an end.” and they make no contingency for the unknown.

  3. The Big 4 banks are majority owned by 4 banking entities and are insolvent if not funded by offshore finance. Three of them are in the top 10 of global banks and are leveraged around 30 times their assets.(Same as Lehman Bros) They are totally supported by Government Guarantees and make obscene profits at the expense of the country and its people. Brexit was really about the European financial sector and leaders living high on the hog while imposing austerity on their people. Australia is following the same path. The banks may be too big to fail so we should bring in “capital punishment” to jail those responsible for the fraud at these highest levels.

  4. @ estupidos

    “THEY” wil. Do somthing about it alright…but YOU won’t like it at all…

    First they will allow ” bail ins” so there goes anything you thought you had in the bank..

    Then they will ” Bail out ” the banks by writing a multi billion dollar cheque care of YOU the taxpayer.

    Then they will change the accounting “Rules” so that the bans are magically solvent again.

    See it’s all quite simple really. Now back to work slave…

  5. The justification for bank and insurance company bailouts is simple. Let the first one fail so that when everyone sees the market turmoil that creates you can justify doing anything to save the others.

  6. We’re on the verge of deflation, salary growth stagnating, under-employment through the roof, AU dollar weakened significantly, and house prices are still through the roof. It’s a bloody joke. Nobody I know can realistically afford to buy unless they are particularly stupid. Government should be ashamed.

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