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CREATE 2021 Foreign Bank Tracker - ENGAGE - Minter Ellison
Introduction

                                            Welcome to the sixth edition of our Foreign
                                            Bank Tracker, which analyses capital flow trends
                                            into Australia via foreign banks. Informed by the
                                            Australian Prudential Regulation Authority (APRA)
                                            statistics, and our own experiences with clients
                                            across the globe, our report provides market
                                            analysis and predictions around ongoing foreign
                                            investment patterns into Australia.

                                            In 2020, major events threatened the investment
                                            landscape throughout the world. And yet, in spite
                                            of all the turmoil, foreign banks continued their
                                            expansion into Australia.

Creating value from
capital flow                                John Elias
                                            Lead Partner,
                                                                        Stuart Johnson
                                                                        Managing Partner of
                                            Foreign Bank Tracker        Capital Markets Corporate

MinterEllison | Foreign Bank Tracker 2021                                                           3
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This year’s report
highlights several
key trends:
                                                                                                                     As global economies             Foreign banks’ growing
While growth was slower                                                                                              shift to ‘recovery mode’,       presence in Australia
than in previous years, foreign                                                                                      we anticipate more              reflects that overall long
banks continued to increase                                                                                          opportunities and increased     term confidence.
their presence in Australia.                                                                                         foreign bank growth.
                                                                                                                                                     Looking ahead, we’re
                                                                                                                     As 2021 continues, we’re        likely to continue seeing
                                                                                                                     seeing growing confidence       some volatility as markets
                                                                                                                     in the market, driven by        around the world shift and
                          North American banks                                                                       the vaccine rollout and         recover from the economic
                          grew resident Australian                                                                   economies being reopened.       slowdown and market
                          assets by 26%                                                                              In 2020, businesses were        uncertainty – and, at different
                                                                                                                     focused mainly on survival.     paces. Overall, however,
                                                                                                                     Now momentum is building        the foreign bank activity
                                                                                                                     as businesses start to          paints a positive picture of
                                                                                                                     recover and repay loans to      capital flow into Australia.
                                                                                                                     banks, governments provide      With increased government
                          Asian banks                                        European banks
                                                                                                                     incentives for business         stimulus, customers
                          grew by 12%                                        grew by 7%
                                                                                                                     spending and growth, and        embracing digital solutions
                                                                                                                     funds with capital to spend     and Australia offering a
                                                                                                                     are looking for opportunities   relatively stable market, we
                                                                                                                     to invest.                      have high confidence there
                                                                                                                                                     will be plenty of opportunities
                                                                                                                                                     ahead.
While overall this is a little              and the Foreign Investment             driven by the COVID-19
slower than in previous                     Review Board (FIRB) lowering           pandemic – lockdowns and
years, the growth patterns                  the threshold to zero for FIRB         the economic slowdown,
are promising. The figures                  scrutiny.                              travel disruptions and
are all the more impressive                                                        cashflow volatility – long term
when one considers the 2020                 While economies around                 prospects are positive as banks
events including investments                the world were impacted by             find themselves in relatively
stalling, deals falling through             a number of factors largely            stable positions.

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Contents

  6         Key highlights                          20   Japan

  8         The Global Picture                      21   Singapore

 10         Key Findings: Europe                    22   India

 12         Germany and France                      23   South Korea

 13         The Netherlands and Switzerland         24   Key Findings: North America

 14         UK Banks                                28   North America

 16         Key Findings: Asia                      29   Canada

            Asian Banks:
 17                                                 30   Conclusion
            Total resident asset value and growth

 18         Mainland China                          31   About this report

 19         Taiwan                                  32   Contacts

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Key highlights

     Two new banks                                   North America                         Asia:
      Both European:
                                                     Fastest growing                       Asian Bank growth
                                                     region in 2020.                       slowed from           to

                                                                   Up
                                                                                           17%                   12%
                                                                   26%
                                                     in resident Australian asset growth
                                                                                           Taiwanese
                                                                                           banks grew

      Transferwise (HQ UK); granted a (restricted)
      banking license in November 20
                                                                                           17%
                                                                    US Banks:              Chinese banks

                                                                    27%
                                                                                           dropped from          to

                                                                                           20%                   13%
      Intesa Sanpaolo SPA (Italy)

                                                                    Canadian:              Japanese banks grew

                                                                     19%                   12%

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Europe:
                             Grew resident Australian assets by   The exception is with France
                                                                  – with French banks recording

                             7%             the weakest growth
                                            since 2017.
                                                                  41%            growth.

     Relatively subdued growth

                             United Kingdom                       Germany
                             5%                                   3%

                             Switzerland                          The Netherlands
                             1%                                   8%

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The Global Picture

Resident Assets                             Over the past year, North
by Region                                   American banks in Australia have
                                            been the fastest growing of banks
                                            from the three different regions.

                                            • F
                                               astest growing foreign banks
                                              fairly evenly spread between
                                              the different regions: three
                                              from Europe, three from North
  1. Europe                                   America, and four from Asia.

                                            • B
                                               anks in top 10 had a sizeable
                                              presence in Australia - just two
                                              having less than $1bn in assets.

                                            • G
                                               rowing presence of large
                                              foreign trust banks: Northern
                                              Trust, State Street and BNP
                                              Paribas are three of the four
  2. Asia
                                              largest banks in the top 10
                                              fastest growing banks

                                            • S
                                               ociety Generale and Paypal
                                              both made the top 10 fastest
                                              growing foreign banks in their
                                              second year in APRA’s data,
                                              and neither are the smallest
                                              two banks in the top 10.
  3. North America

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Total Resident Assets Held by                                                                  Total Resident Assets Held by Foreign Banks
               Foreign Banks in Australia – growth rates                                                                   in Australia CAGR since 2002
 60%                                                                                                         40%
 50%
                                                                                                             30%
 40%
 30%                                                                                                         20%
 20%
                                                                                                             10%
 10%
  0%                                                                                                          0%
-10%
                                                                                                             -10%
-20%
-30%                                                                                                         -20%
    2003        2005       2007         2009        2011          2013     2015      2017        2019               2003      2005       2007      2009    2011      2013        2015     2017      2019
                               Europe              North America           Asia                                                                 Europe       North America               Asia

                          Total Resident Assets Held by                                                                                   Total Resident Assets Held
                        Banks in Australia – growth rates                                                                                by Foreign Banks in Australia
                                                                                                              350

 50%                                                                                                          300
                                                                                                                           A$ billions
 40%                                                                                                          250
 30%
                                                                                                              200
 20%
 10%                                                                                                          150
   0%
                                                                                                              100
 -10%
                                                                                                               50
 -20%
 -30%                                                                                                           0
       2003      2005       2007        2009        2011          2013     2015      2017        2019                2002      2004      2006      2008   2010      2012     2014       2016     2018      2020
                 Europe            North America           Asia          Au Majors          Australian GDP                                       Europe          North America            Asia

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Key Findings:
Europe

There are now 19 European banks
operating in Australia. 2020 saw
two new entrants: TransferWise
Australia (a subsidiary of the UK
headquartered TransferWise) and
Intesa Sanpaolo SPA from Italy.

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Key Findings: Europe

                                            French banks in aggregate            UBS almost completely offset        Australia in 2019 following a six-        contracted resident Australian
                                            recorded the fastest growth          by a contraction in assets from     year absence. BNP Paribas, ABN            assets over the past year;
                                            rate of 41%, driven by strong        Credit Suisse.                      Amro, Standard Chartered and              however it is worth noting that
                                            growth from both Société                                                 Investec Bank all grew Australian         for two of these three banks
                                            Générale and BNP Paribas. In         Société Générale was the fastest    assets by over 20% in 2020.               they have additional locally
                                            contrast, Swiss banks were in        growing bank, increasing in                                                   licenced entities which grew.
                                            aggregate the slowest growing        size by approximately 3¾x, off      Credit Suisse, Cooperative
                                            at just 0.7%, with growth by         a small base after reopening in     Rabobank and the HSBC all

                                                                                                                                                          60%
                                            350                                                                                                                    Europe Banks
                                                  A$ billions
                                            300
                                                                                                                                                          50%      YOY% growth
                                                                                                                                                          40%
                                            250
                                                                                                                                                          30%
                                                                                                                                                                           The Netherlands
                                            200                                                                                                           20%
                                                                                                                                                                           UK

                                                                                                                                                          10%              Germany
                                            150
                                                                                                                                                                           France
                                                                                                                                                          0%
                                            100                                                                                                                            Switzerland
                                                                                                                                                          -10%             Cyprus
                                             50                                                                                                                            Ireland
                                                                                                                                                          -20%
                                                                                                                                                                           Spain
                                              0                                                                                                           -30%             Total Europe Growth %
                                                  2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

                                                           European banks grew                               Dutch banks are the largest                          ING Bank (Australia) is the
                                                           resident Australian assets by                     in Australia (mainly ING but                         largest European bank in
                                                           $18.6bn in aggregate, the                         also Rabobank), followed by                          Australia, followed by HSBC
                                                           equivalent of 7%.                                 British banks (mainly HSBC).                         Bank Australia, Rabobank
                                                                                                                                                                  and UBS.

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Europe

Germany and France

    45
           A$ billions
                                                                                                                                                     60%     German Banks
                                                                                                                                                     50%
    40                                                                                                                                                       YOY% growth
    35                                                                                                                                               40%
                                                                                                                                                     30%
    30
                                                                                                                                                     20%
    25
                                                                                                                                                     10%
    20
                                                                                                                                                     0%
    15
                                                                                                                                                     -10%
    10                                                                                                                                               -20%
                                                                                                                                                                 Deutsche Bank Aktiengesellschaft
      5                                                                                                                                              -30%        WestLB AG
      0                                                                                                                                              -40%        Dresdner Bank AG
          2002    2003    2004    2005      2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020               Total Germany Growth %

    60                                                                                                                                               200%
           A$ billions
                                                                                                                                                             French Banks
    50                                                                                                                                               150%    YOY% growth
    40                                                                                                                                               100%

    30                                                                                                                                               50%

    20                                                                                                                                               0%

    10                                                                                                                                               -50%        BNP Paribas
                                                                                                                                                                 BNP Paribas Securities Services
      0                                                                                                                                              -100%       Societe Generale
          2002    2003    2004    2005      2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020               Total France Growth %

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Europe

The Netherlands and Switzerland

   140                                                                                                                                               50%
           A$ billions                                                                                                                                      Dutch Banks
   120                                                                                                                                               40%    YOY% growth
   100
                                                                                                                                                     30%
    80
                                                                                                                                                     20%
    60
                                                                                                                                                     10%
    40
                                                                                                                                                               ING Bank
    20                                                                                                                                               0%        Rabobank
                                                                                                                                                               Fortis Bank SA/NV
      0                                                                                                                                              -10%      ABN AMRO Bank N.V.
          2002    2003    2004    2005      2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020             Total Netherlands Growth %

    30                                                                                                                                               80%
           A$ billions
                                                                                                                                                            Swiss Banks
    25                                                                                                                                               60%    YOY% growth
    20                                                                                                                                               40%

    15                                                                                                                                               20%

    10                                                                                                                                               0%

      5                                                                                                                                              -20%
                                                                                                                                                               UBS AG
      0                                                                                                                                              -40%      Credit Suisse AG
          2002    2003    2004    2005      2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020             Total Switzerland Growth %

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Europe

UK Banks
In the UK, 2020 had                         Unfortunately COVID-19 meant           And while the first half of 2020        As global economies start to         With growing confidence in the
been the year everyone                      that the market halted again.          saw a slowdown in market                recover from lockdown periods,       UK as a result of the COVID-19
                                            We saw fairly weak growth in           activity, by June it had picked         businesses are starting to repay     vaccine rollout and the UK
was waiting for – with
                                            UK-based banks, and a drop in          back up. We still saw interest in       loans again, which will assist       government’s budget measures
Brexit coming to an end                     the total UK growth percentage.        Australian targets. While deals         banks in maintaining their capital   to stimulate spending and
and the UK elections                        However, 2020 saw the entry of a       were significantly slower to close,     adequacy thresholds. Private         growth, we’re anticipating a
recently taking place,                      new bank, TransferWise Australia,      activity was still taking place,        equity funds are holding onto        boom of market activity – and
investors were looking                      which is a subsidiary of the UK        particularly towards the end of         a significant amount of capital,     Australia remains an attractive
forward to a period                         headquartered TransferWise.            the year.                               and are looking for opportunities    location for investment.
                                                                                                                           to invest.
of stability.

   120                                                                                                                                                   60%    UK Banks
           A$ billions
                                                                                                                                                         50%    YOY% growth
   100                                                                                                                                                                 HSBC Bank Plc
                                                                                                                                                         40%
                                                                                                                                                                       The Royal Bank of Scotland plc
                                                                                                                                                         30%           The Royal Bank of Scotland N.V.
    80                                                                                                                                                                 Barclays Bank PLC
                                                                                                                                                         20%           Bank of Scotland plc
                                                                                                                                                                       Lloyds TSB Bank plc
    60                                                                                                                                                   10%           Investec Bank
                                                                                                                                                                       NM Rothschild & Sons
                                                                                                                                                         0%            (Australia) Limited
    40                                                                                                                                                                 Standard Chartered
                                                                                                                                                         -10%
                                                                                                                                                                       Total UK Growth %

                                                                                                                                                         -20%
    20
                                                                                                                                                         -30%

     0                                                                                                                                                   -40%
          2002    2003    2004    2005      2006   2007   2008   2009   2010    2011   2012   2013   2014   2015    2016   2017   2018    2019   2020

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Key Findings:
Asia

                                                orth Asian countries who
                                               N
                                               are major trading partners of
Asian banks grew resident Australian           Australia, namely China, Japan
assets by $20.4 billion in aggregate,          and also Taiwan, recorded double
the equivalent of 12%. While the growth        digit growth.
rate slowed, Asian foreign bank growth
appears to be a trend set to continue.
2020 saw a lag in capital investment and
deals from Asian investors as short term,
lockdowns paused economic activity
earlier in the year, but the end of the year    ank of Baroda from India was
                                               B
saw deals picking back up.                     the fastest growing Asian bank,
                                               more than doubling resident
                                               assets – though from a low base.

                                                hina Everbright increased
                                               C
                                               resident assets by over 80%,
                                               and Bank of Communications
                                               increased resident assets by
                                               over 50%.

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Asia

Key Findings:                               Asian Banks:
Asia                                        Total Resident Asset Value and growth

• T
   here are 28 Asian banks                 Asian Banks YOY% growth
  operating in Australia -
  unchanged since last year.                       Japan             China             Singapore             Taiwan           India            Korea              Total Asia Growth %

• J
   apanese banks have the
  largest regional presence
  in Australia, followed by
                                            250                                                                                                                                                  60%
  Chinese banks.
                                                    A$ billions
• M
   UFG (Japan) is the largest
                                                                                                                                                                                                 50%
  in Australia. SMBC (Japan) is
  second largest, followed by               200
  Bank of China (China).                                                                                                                                                                         40%

• M
   izuho Bank (Japan) is the
  fourth largest bank followed by                                                                                                                                                                30%
  UOB (Singapore), ICBC (China)             150
  and OCBC (Singapore).
                                                                                                                                                                                                 20%

                                            100
                                                                                                                                                                                                 10%

                                                                                                                                                                                                 0%
                                            50

                                                                                                                                                                                                 -10%

                                             0                                                                                                                                                   -20%
                                                  2002   2003     2004   2005   2006   2007    2008   2009     2010   2011   2012     2013   2014   2015   2016     2017    2018   2019   2020

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Asia

Mainland China

The overall story for the                   Bank of China remains the             The top 3 Chinese banks by            Australia and continued interest     The ongoing impact of
mainland Chinese banks                      largest Chinese bank by resident      Australian resident asset growth      in renewable energy and energy      COVID-19 and China’s 14th five
                                            Australian assets. Its percentage     in percentage terms are China         storage. This reflects a goal       year plan will, however, shape
appears to be one of
                                            growth relative to other Chinese      Everbright Bank, Bank of              recently set by the Chinese         these trends.
continued, measured                         banks in Australia has slowed         Communications and Bank of            government to achieve carbon
growth among larger                         in recent years, allowing             China.                                peak by 2030, and carbon
established players and                     China Everbright and Bank of                                                neutrality by 2060. We also
continued searches for                      Communications to pass it as the      We continue to expect the trend       expect a continued interest in
                                            fastest growing Chinese bank in       and approach of China’s banks         industries such as minerals and
growth among newer,
                                            Australia.                            to follow their clients, which        resources, education, agtech,
smaller, market entrants.
                                                                                  includes ongoing investment in        biomedicine and health.

  70                                                                                                                                             250%      Chinese Banks
          A$ billions
                                                                                                                                                           YOY% growth
  60
                                                                                                                                                 200%

                                                                                                                                                                 Bank of China Limited
  50
                                                                                                                                                 150%            Bank of China
                                                                                                                                                                 (Australia) Limited
  40                                                                                                                                                             Industrial and Commercial
                                                                                                                                                                 Bank of China Limited
                                                                                                                                                 100%
                                                                                                                                                                 China Construction Bank
  30                                                                                                                                                             Corporation
                                                                                                                                                                 Agricultural Bank of
                                                                                                                                                 50%             China Limited
  20
                                                                                                                                                                 Bank of Communications
                                                                                                                                                                 Co., Ltd.
                                                                                                                                                 0%              China Merchants Bank
  10
                                                                                                                                                                 Co., Ltd
                                                                                                                                                                 China Everbright Bank
   0                                                                                                                                             -50%            Co., Ltd
        2002    2003    2004   2005    2006    2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020                   Total Chinese Growth %

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Asia

Taiwan

In aggregate, Taiwan’s                      Mega International Commercial          The top three Taiwanese              The Taiwanese banks’ presence
banks now have $13.3bn                      Bank remains the largest               banks by percentage growth in        in Australia remains an area of
                                            Taiwanese bank by resident             Australian resident assets were      healthy growth to be watched,
of resident Australian
                                            assets in Australia.                   Taishin International Bank, Hua      albeit on a smaller scale to
assets, up 17% over the                                                            Nan Commercial Bank and Mega         mainland China.
past year.                                                                         International Commercial Bank.

  14                                                                                                                                              80%     Taiwanese Banks
           A$ billions
                                                                                                                                                  70%     YOY% growth
  12
                                                                                                                                                  60%

  10                                                                                                                                              50%

                                                                                                                                                  40%         Mega International
   8
                                                                                                                                                              Commercial Bank Co., Ltd.
                                                                                                                                                  30%         Taiwan Business Bank
   6                                                                                                                                              20%         First Commercial Bank
                                                                                                                                                              Hua Nan Commercial Bank, Ltd.
                                                                                                                                                  10%
   4                                                                                                                                                          Taiwan Cooperative Bank, Ltd
                                                                                                                                                  0%          E.SUN Commercial Bank, Ltd.
   2                                                                                                                                                          Taishin International Bank
                                                                                                                                                  -10%        Co., Ltd
                                                                                                                                                              Bank of Taiwan
   0                                                                                                                                              -20%
        2002    2003     2004   2005   2006    2007   2008   2009   2010    2011   2012   2013   2014   2015   2016   2017   2018   2019   2020               Total Taiwan Growth %

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Asia

Japan

Japanese bank activity                      Consistent with SMBC’s strong        Finally, the decision by the         Marubeni, Sumitomo and                MUFG, SMBC and Mizuho Bank
in Australia continues                      22% growth in 2020, we expect        Japanese Government to               ITOCHU have committed to no           have all recently announced new
                                            SMBC’s exposure to grow in           become carbon neutral by             longer participate in new coal-       investments funds that will focus
to go from strength to
                                            Australia in the short-to-medium     2050 is a significant policy         fired power plants whilst Mizuho      on both domestic and overseas
strength. MUFG remains                      term following their commitment      announcement that will further       Financial Group has halted all        renewable energy assets and
Japan’s largest bank                        to the NSW Government in             accelerate the trends we have        new financing for such projects       incorporate environmental, social
in Australia and grew                       respect of the Western Sydney        been seeing in the Japanese          and aims to reduce outstanding        and governance factors into their
its resident Australian                     Airport and Western Sydney           market in recent years towards       credit for such projects to zero      investment decisions.
assets by 5% or $1.3bn to                   Aerotropolis, Australia’s largest    the adoption of domestic             by 2040. Conversely, each of
                                            single infrastructure project        renewable energy.
$30.7bn last year.
                                            which is expected to commence
                                            operations in 2026.
                                                                                 Japanese Banks YOY% growth
Both SMBC and Mizuho Bank also
                                            The continued double-digit                   MUFG Bank, Ltd.          Sumitomo Mitsui              Mizuho Bank, Ltd.        Total Japan Growth %
strengthened their presence with
                                            growth in Japanese bank assets                                        Banking Corporation
$29.3bn and $19.8bn in resident
                                            in Australia reflects the broader    90                                                                                                       80%
assets respectively, increasing by
                                            economic trends in Japan. The                A$ billions
$5.2bn and $2.1bn respectively                                                   80                                                                                                       70%
                                            Japanese economy, like all
over the past year, equivalent to
                                            major economies at present, is                                                                                                                60%
increases of 22% and 12%. This                                                   70
                                            under pressure from the global
places all three of these Japanese                                                                                                                                                        50%
                                            headwinds that COVID-19
banks within the top 10 foreign                                                  60
                                            presents. Coupled with a                                                                                                                      40%
banks by resident assets in
                                            decreasing Japanese population       50                                                                                                       30%
Australia.
                                            and the Bank of Japan’s inability
                                            to reach its 2% inflation targets,   40                                                                                                       20%
                                            these factors are driving Japan’s                                                                                                             10%
                                                                                 30
                                            mega banks offshore for growth
                                                                                                                                                                                          0%
                                            opportunities, together with the     20
                                            remainder of Japan Inc.                                                                                                                       -10%
                                                                                 10                                                                                                       -20%

                                                                                  0                                                                                                       -30%
                                                                                      2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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Asia

Singapore

Throughout 2020,                            Against this backdrop, Australia     Through its 2021 budget,                  There is a continued emphasis         chains in the region. This should
overall growth from                         has remained an attractive           Singapore has indicated that              on positioning Singapore as           translate into an increasing
                                            investment destination for           it will continue to support the           a global node of technology,          number of commercial and
Singapore’s three banks
                                            public and private Singaporean       recovery from the COVID-19                innovation and enterprise, and        economic links between
present in Australia                        investors. With a view towards       pandemic, but at the same time,           placing Singaporean firms at          Singapore and Australia in the
continued – although                        long term opportunities, Australia   position itself for future growth.        the intersection of key global        coming years.
their growth rate has                       is generally seen by Singaporean
decreased from previous                     investors as a close, safe and
years.                                      stable jurisdiction.

Being a relatively small, but highly
                                            Real estate, infrastructure and
developed and sophisticated
                                            education have always been key
country with strong economic
                                            areas of interest for Singaporean    Singaporean Banks YOY% growth
foundations, Singapore was able
                                            investors. We also saw increased
to swiftly react to the economic                                                           United Overseas            Oversea-Chinese Banking         DBS Bank Ltd         Total Singapore Growth %
                                            interest in technology and                     Bank Limited               Corporation Limited
challenges of the COVID-19
                                            agriculture assets during
pandemic via a range of stimulus                                                 35                                                                                                           80%
                                            2020. The Australia-Singapore
measures, ranging from the
                                            Digital Economy Agreement                                  A$ billions                                                                            70%
Stabilization and Support                                                        30
                                            (DEA) entered into force on 8
Package to various employment                                                                                                                                                                 60%
                                            December 2020. The DEA aims
related, sector specific and                                                                                                                                                                  50%
                                            to facilitate more digital trade     25
general economic stimulus
                                            opportunities through cross-                                                                                                                      40%
measures. While Singapore’s
                                            border data flows, developing        20
GDP contracted in 2020, the year                                                                                                                                                              30%
                                            standards for open banking
ended on a generally optimistic                                                                                                                                                               20%
                                            and encouraging collaboration        15
note as the economy shrank less
                                            between FinTech and RegTech                                                                                                                       10%
than expected.
                                            enterprises, which could see
                                                                                 10                                                                                                           0%
                                            increased interest and activity in
                                            the technology space.                                                                                                                             -10%
                                                                                 5
                                                                                                                                                                                              -20%

                                                                                 0                                                                                                            -30%
                                                                                      2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

MinterEllison | Foreign Bank Tracker 2021                                                                                                                                                        21
Asia

India

COVID 19 and its downstream                 Corporate clients generally           The pick up in the Australian
impact on supply chain and                  deferred their debt raising plans     economy in recent months
other activities, had a profound            during the difficult and uncertain    and the generally more upbeat
impact on capital flows and                 COVID impacted year, and in           environment is reflected in an
business volumes of Indian banks            common with Australian banks,         uptick in more recent activity.
operating in Australia. Exposure            Indian banks were kept busy           Indian banks expect that 2021
to corporates, particularly in              extending all necessary support to    will see a return of their business
relation to working capital and             their corporate clients to weather    activity to pre-COVID levels
resident assets declined during             the impact of the pandemic.           and growth momentum will be
the year. So too did trade finance          This included extending liquidity     regained.
volumes which were down by                  mismatch support, waivers of
approximately 15 – 20 %, year               covenants and deferral of fees
on year.                                    and interest charges.

Indian Banks YOY% growth
        State Bank of India         Bank of Baroda          Union Bank of India      Total India Growth %

3.5                                                                                                         350%
         A$ billions
3.0                                                                                                         300%

                                                                                                            250%
2.5

                                                                                                            200%
2.0
                                                                                                            150%
1.5
                                                                                                            100%

1.0
                                                                                                            50%

0.5                                                                                                         0%

0.0                                                                                                         -50%
      2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

MinterEllison | Foreign Bank Tracker 2021                                                                               22
Asia

South Korea

The COVID-19 pandemic                       kangaroo bonds in the amount               and project financing of the        Once COVID-19 is contained              due to IPO later this year) has
has caused global                           of $500 million, $400 million              162MW Columboola solar farm         and we reach a post pandemic            around 13.6 million users and
                                            and $400 million respectively,             in Queensland. Additionally         recovery, greater consideration         is commended for its speed,
economic disruption
                                            in an effort to provide loans              in February 2020, the Reserve       should be given to Korea’s new          contactless service and low
resulting in a major                        to South Korean companies                  Bank of Australia renewed the       and emerging digital banking            interest rates. Accordingly, the
slowdown in Korean                          impacted by the coronavirus                bilateral local currency swap       market which now coexists with          opportunities in Australia look
export and domestic                         and to finance eco-friendly                agreement with the Bank of          traditional banking. Internet-only      fruitful once both economies
consumption.                                projects. Korea’s attraction               Korea which is reflective of the    banking is on the rise and has          walk the road to recovery with
                                            towards renewables remained                commitment towards bilateral        gained widespread attraction            many speculating that the era
                                            steady with one of Korea’s major           trade notwithstanding a period of   particularly from retail customers.     of Korea’s digital banking to be
With Korea’s GDP experiencing               financial players, Hana Financial          financial uncertainties.            Notably, Korea’s mobile-only            just the beginning of the nation’s
the steepest decline since the              Investment, sealing its $199                                                   bank, Kakaobank (which is               surge in technology investment.
Asian Financial Crisis in 1998,             million acquisition, development
it appears that the nation’s
potential for penetrating the                2,500                                                                                                         600%      Korean Banks
Australian banking sector,
which was well on track, is now                       A$ millions                                                                                                    YOY% growth
                                                                                                                                                           500%
deprioritised as the focus has
                                             2,000
become keeping the momentum
in local economic recovery.                                                                                                                                400%

While activity in the Australia-             1,500
                                                                                                                                                           300%
Korea banking sector remained
sluggish, 2020 still witnessed
a number of meaningful                                                                                                                                     200%
                                             1,000
investments. The major
Korean banks such as Korea                                                                                                                                 100%
Development Bank, Woori
                                              500                                                                                                                            KEB HANA Bank
Bank and Shinhan Bank issued
                                                                                                                                                           0%
                                                                                                                                                                             Woori Bank
                                                                                                                                                                             Shinhan Bank Co., Ltd
                                                0                                                                                                          -100%
                                                      2012       2013           2014        2015       2016        2017     2018        2019       2020                      Total Korea Growth %

MinterEllison | Foreign Bank Tracker 2021                                                                                                                                                            23
Key Findings:
North America

While North American banks are the
smallest foreign region by resident
Australian assets, they grew the fastest
of the three global regions over the past
year - by 26% or $26.6bn to $130.6bn.

There are 11 North American banks
operating in Australia.

MinterEllison | Foreign Bank Tracker 2021   24
Key Findings: North America

                                            In percentage terms, the larger               In summary:
                                            US banks grew faster than
                                                                                          • N
                                                                                             orth American banks grew resident
                                            Canadian banks, with growth                     Australian assets by 26% or $26.6bn to
                                            over the past year of 27% vs                    $130.6bn in aggregate.
                                            19% - which when expressed
                                            in terms of dollars growth in                 • U
                                                                                             S banks have over five times the
                                                                                            resident Australian assets of Canadian
                                            resident assets is even more
                                                                                            banks.
                                            pronounced: $23.4bn vs $3.3bn.
                                                                                          • T
                                                                                             he major US banks dominate the
                                                                                            North American banks with residents in
                                            Of individual banks, the Northern Trust was     Australia, led by Citibank, JP Morgan and
                                            the fastest growing, increasing resident        Bank of America, with North American
                                            assets by over three times, an increase of      trust banks such as Northern Trust, State
                                            over $8.1bn in resident assets, followed by     Street continuing to grow strongly too.
                                            State Street, Paypal, and JP Morgan, which
                                            all recorded over 30% growth in resident
                                            assets.

                                            Bank of America and Bank of New York
                                            Mellon both contracted resident Australian
                                            assets over the past year.                     orth American banks grew
                                                                                          N
                                                                                          resident Australian assets
                                                                                                         by

                                                                                                         26%
                                                                                          or $26.6bn to $130.6bn
                                                                                          in aggregate.”

MinterEllison | Foreign Bank Tracker 2021                                                                                            25
North America

North America

140                                                                                                                                              40%    North American
                A$ billions                                                                                                                             Banks YOY% growth

120
                                                                                                                                                 30%        US

                                                                                                                                                            Canada

                                                                                                                                                            Total North America Growth %
100
                                                                                                                                                 20%

 80

                                                                                                                                                 10%

 60

                                                                                                                                                 0%
 40

                                                                                                                                                 -10%
 20

   0                                                                                                                                             -20%
       2002    2003     2004    2005    2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020

MinterEllison | Foreign Bank Tracker 2021                                                                                                                                          26
North America

North America

140                                                                                                                                              40%    All North American
                                                                                                                                                        Banks YOY% growth

120                                                                                                                                                         Citibank, N.A.
              A$ billions                                                                                                                        30%
                                                                                                                                                            Citigroup Pty Limited

                                                                                                                                                            JPMorgan Chase Bank,
                                                                                                                                                            National Association
100
                                                                                                                                                            Bank of America,
                                                                                                                                                 20%        National Association
                                                                                                                                                            Royal Bank of Canada
                                                                                                                                                            State Street Bank and
  80                                                                                                                                                        Trust Company
                                                                                                                                                            The Toronto-Dominion
                                                                                                                                                 10%        Bank
                                                                                                                                                            The Northern
  60                                                                                                                                                        Trust Company
                                                                                                                                                            The Bank of Nova Scotia
                                                                                                                                                            Canadian Imperial Bank
                                                                                                                                                 0%         of Commerce
  40                                                                                                                                                        PayPal Australia Pty Limited
                                                                                                                                                            Bank One, National Association
                                                                                                                                                            The Bank of New York Mellon
                                                                                                                                                 -10%
  20                                                                                                                                                        Total (All) Growth %

   0                                                                                                                                             -20%
       2002     2003    2004    2005    2006   2007   2008   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020

MinterEllison | Foreign Bank Tracker 2021                                                                                                                                              27
America

North America                                                                                                 North America was                   While there was a concern that
                                                                                                              the fastest growing                 US banks may have withdrawn
                                                                                                                                                  from overseas markets to focus
                                                                                                              region for overseas
                                                                                                                                                  on domestic priorities in 2020
                                                                                                              banks in Australia in               due to the pandemic, this has
                                                                                                              2020, growing resident              not been the case. In fact, activity
US Banks YOY% growth                                                                                          Australian assets by 26%.           and assets grew at a steady rate
                                                                                                                                                  as it became evident that the
          Citibank, N.A.                                Citigroup Pty Limited                                                                     pandemic would not evolve into
                                                                                                              US banks have over five times
          JPMorgan Chase Bank, National Association     Bank of America, National Association                 the resident Australian assets of   a financial crisis.
          State Street Bank and Trust Company           The Northern Trust Company                            Canadian banks.
                                                                                                                                                  Non-traditional banks such
          PayPal Australia Pty Limited                  Bank One, National Association
                                                                                                              Citibank’s dominant presence in     as Paypal also increased their
          The Bank of New York Mellon                   Total US Growth %                                                                         presence and activity in Australia,
                                                                                                              terms of US bank assets located
                                                                                                              in Australia has been reduced       competing with non-bank
                                                                                                              since the Global Financial Crisis   financial services. American
120                                                                                                    40%
                                                                                                              and no longer accounts for the      Express also expanded into
         A$ billions                                                                                          majority of US bank Australian      Australia to compete with
                                                                                                              resident assets. Alternative        established banks, launching its
100                                                                                                    30%
                                                                                                              financial services companies        small business lending offering –
                                                                                                              have seen significant growth,       its first market for this outside of
80                                                                                                     20%    including Northern Trust who        the US.
                                                                                                              have made a conscious decision
                                                                                                              to increase their presence and      With banks and consumers
60                                                                                                     10%    take on competitors in Australia,   across the world embracing
                                                                                                              with a particular focus on asset    online banking like never before,
                                                                                                              management.                         US banks pushing towards digital
40                                                                                                     0%                                         transformation are continuing
                                                                                                                                                  to lead the world in digital and
                                                                                                                                                  mobile banking. We’re seeing
20                                                                                                     -10%                                       technologies such as artificial
                                                                                                                                                  intelligence, robotic process
                                                                                                                                                  automation and other disruptive
 0                                                                                                     -20%
                                                                                                                                                  banking technologies starting
      2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
                                                                                                                                                  to gain traction – and the US is
                                                                                                                                                  leading the way.

MinterEllison | Foreign Bank Tracker 2021                                                                                                                                          28
Canada

Similar to banks from                       Canadian Banks YOY% growth
several Asian countries,
there are three Canadian                          Royal Bank of Canada             The Toronto-Dominion Bank              The Bank of Nova Scotia

banks with resident                               Canadian Imperial Bank of Commerce             Total Canada Growth %

Australian assets.

The largest of these is Royal               25                                                                                                                                                80%
Bank of Canada, with $11.0bn of
resident Australian assets, just                        A$ billions
over half of the total Canadian                                                                                                                                                               60%
banks’ resident Australian assets           20
of $20.5bn.
                                                                                                                                                                                              40%
It was the slowest growing
Canadian bank by resident
Australian assets in percentage             15
                                                                                                                                                                                              20%
terms, with other Canadian banks
outgrowing it in both percentage
and dollar terms, although there
                                                                                                                                                                                              0%
was not too much difference in              10
dollar terms, with all Canadian
banks growing resident assets
between $1.0bn and $1.2bn.                                                                                                                                                                    -20%

The Bank of Novia Scotia was the             5
fastest growing Canadian bank,                                                                                                                                                                -40%
increasing resident assets by 33%
or $1.2bn.
                                             0                                                                                                                                                -60%
We anticipate further Canadian
                                                 2002    2003   2004     2005   2006   2007   2008   2009   2010   2011     2012   2013    2014     2015   2016   2017   2018   2019   2020
bank growth in Australia in the
coming years, reflecting broader
macro-economic shifts.

MinterEllison | Foreign Bank Tracker 2021                                                                                                                                                       29
Conclusion

The data we explored                        While foreign bank growth            Now banks find themselves in a    There are challenges – travel       Our multidisciplinary,
in this report around                       wasn’t as strong as it had been in   fortunate situation, with money   restrictions, regulatory hurdles    international team at
                                            previous years, we observed that     to invest and opportunities to    including FIRB and ACCC             MinterEllison can help you
foreign bank activity
                                            in many cases, market activity       explore.                          requirements and managing           navigate the challenges
and capital flow paints                     paused for a period of time –                                          multiple state jurisdictions, for   and take advantage of the
a far more positive                         but it restarted before the end of   Compared to other markets,        example. However, the results       opportunities with investing in
picture than many had                       the year.                            Australia has been relatively     are extremely rewarding –           Australia.
anticipated throughout                                                           stable throughout 2020 and        and foreign banks’ continued
                                                                                 is an increasingly attractive     growth reflects that optimism.      Contact us for a tailored
2020.
                                                                                 investment destination.                                               discussion of your interest.

MinterEllison | Foreign Bank Tracker 2021                                                                                                                                             30
About this report

MinterEllison’s sixth edition Foreign Bank Tracker
provides insights and key trends on the growth of
resident assets held by foreign branch and subsidiary
banks in Australia.
Our insights are based on data              • T
                                               he Domestic books of a bank
from the Australian Prudential                has the following scope:
Regulatory Authority (APRA)
which assess the size of foreign             – includes operations/
bank loan books across three                    transactions booked or
regions – Asia, Europe and US/                  recorded inside Australia;
Canada. The data analysed in this
report is current to 31 December             – d
                                                oes not consolidate
2020.                                          Australian or offshore
                                               controlled entities;
• “ Resident assets” refers to all
   assets on the banks’ domestic             – includes transactions of
   books. Unless otherwise stated,              Australian-based offshore
   the statistics analysed relate               banking units;
   to the operations/transactions
                                             – e
                                                xcludes transactions of
   conducted with residents that
                                               overseas-based offshore
   are recorded on the domestic
                                               banking units;
   books of licensed banks.

                                             – e
                                                xcludes offshore branches;
• T
   he term “Total resident assets”
                                               and
  has been used throughout this
  report. It refers to all assets on
                                             – e
                                                xcludes transactions, assets
  the banks’ domestic books that
                                               and liabilities with offshore
  are due from residents. To put
                                               branches.
  simply, it shows the value of
  assets the foreign banks hold in
  Australia.

MinterEllison | Foreign Bank Tracker 2021                                       31
Contacts

John Elias                                  Jeremy Blackshaw                     Rahoul Chowdry
Lead Partner,                               Managing Partner,                    Partner,
Foreign Bank Tracker                        International                        Financial Services Industry Lead
+61 2 9921 4115                             +61 3 8608 2922                      +61 2 9921 8781
john.elias@minterellison.com                jeremy.blackshaw@minterellison.com   rahoul.chowdry@minterellison.com

UK & Europe                                 Mainland China                       Japan                              Singapore
Nicola Marley                               Bi Chen                              Geread Dooley                      Jeremy Blackshaw   Steven Wang
+44 (0) 207 429 2786                        +86 10 6535 3477                     +61 2 9921 4081                    +61 3 8608 2922    +61 3 8608 2901

India                                       South Korea                          Canada                             US
Rahoul Chowdry                              Tom Shon                             Brendan Clark                      Jeremy Blackshaw   Geoff Earl
+61 2 9921 8781                             +61 2 9921 4214                      +61 7 3119 6455                    +61 3 8608 2922    +61 2 9921 2531

MinterEllison | Foreign Bank Tracker 2021                                                                                                           32
MinterEllison | Foreign Bank Tracker 2021   33
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