International banks seek licenses in Australia

Around ten banks, including lenders from resource hungry China and India, are seeking bank licenses in Australia to tap into rising cross border M&A and infrastructure financing, as local banks struggle with new capital and liquidity rules.

China's Agricultural Bank of China and Bank of Communications, Madrid-based Banco Bilbao Vizcaya Argentaria (BBVA) and Indian lenders Bank of Baroda and Union Bank of India are among banks that are awaiting regulatory clearance, the banks told Reuters.

"The big driver for us in applying for a banking licence in Australia is project finance," said Jonathan Grosvenor, BBVA's managing director and head of corporate clients Asia Pacific.

"We are targeting to be a tier one banking service provider to clients in Australia."

Several other lenders have also submitted applications and are awaiting regulatory approval, according to sources familiar with the situation.

The sources declined to be identified as they are not authorised to speak to the media. Banking regulator APRA declined to comment.

Banks are flocking to Australia as they follow clients who are acquiring assets in the country's vital mining sector and spend heavily to expand mining operations.

Australia's mining and resources industry, including oil and gas, has roughly USD 400 billion in new projects on the drawing board and the boom is expected to boost syndicated loan volumes and debt capital markets issuance.

Analysts said it was a case of banks following clients to a high margin market and expected them to focus on volume driven wholesale banking with little interest in distribution-led retail lending.

(USD 1 = 0.936 Australian Dollars)