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Tuesday, 11 February 1986
Page: 77

(Question No. 155)

Senator Bolkus asked the Minister representing the Treasurer, upon notice, on 27 March 1985:

(1) Is the Treasurer aware of press reports in the Australian of 14 June 1984 indicating the Reserve Bank of Australia has no objection to the proposed takeover of Grindlays subject to certain conditions being met.

(2) What are the criteria used to assess the soundness of banks' overseas acquisitions and their implications for the Australian financial system.

(3) Did the proposed acquisition of Grindlays meet these criteria.

(4) What conditions are applied in respect to Australian banks' overseas acquisitions.

(5) Will the proposed acquisition of Grindlays meet these conditions.

(6) What specific conditions is the Australia and New Zealand Banking Group Ltd and Esanda Ltd (ANZ) required to meet.

(7) Do those conditions ensure that funds raised by the ANZ within Australia are not employed to finance the overseas operations of the ANZ to the detriment of Australian borrowers.

(8) Do those conditions ensure that currency fluctuations or any other event related to the ANZ's foreign operations do not affect the ANZ's domestic operations, or its relations with its Australian customers.

(9) What mechanisms are employed by the Reserve Bank of Australia to ensure that the Australian banking system is insulated from any possible disturbances from overseas.

Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question:

(1) Yes. It should be noted that the conditions referred to in the Australian of 14 June 1984 were not imposed by the Australian authorities; they formed part of the agreement reached between Australia and New Zealand Banking Group Limited (ANZ) and Grindlays for the acquisition by ANZ of the whole of the issued share capital of Grindlays.

(2) and (4) The criteria would be aimed principally at ensuring, as far as possible, the maintenance of a sound and safe banking system in Australia and the protection of Australian depositors. Attention would be given to such factors as capital and liquidity adequacy, structure of assets and liabilities, profit and loss experience, management systems of the proposed acquisition and possible implications for the combined venture. Any conditions which might be applied in respect of such acquisitions would be determined in this light.

(3) and (5) The Reserve Bank was consulted by the ANZ about the proposed acquisition of Grindlays and consented to the proposal outlined in the ANZ's news release of 13 June 1984.

(6) Certain undertakings were given by ANZ designed to satisfy tests referred to in the answer to parts (2) and (4) of this question. These undertakings impact on the private and commercial arrangements between ANZ and Grindlays and it would be inappropriate to elaborate on those arrangements there. No conditions were placed on Esanda Ltd, which is a wholly-owned subsidiary of ANZ.

(7) and (8) ANZ has specifically undertaken to maintain its commitment to its banking operations in Australia.

(9) The Reserve Bank monitors the overseas operations of Australian banks. The Bank seeks details of and monitors the standards which a bank itself applies to matters such as foreign currency exposures, country risk and maturity mismatching. The Reserve Bank seeks to ensure that these standards are appropriate to the circumstances of each bank; that the bank has suitable management control systems to ensure that those standards are observed; and that these are adaptable in the light of changing circumstances.