Chinese banks push lending
Chinese state-owned banks are stepping up their push to lend more to the biggest companies in Australia, overtaking Western giants such as JPMorgan, Royal Bank of Scotland and Barclays as providers of syndicated finance.
In a sign of their rapid growth, in the June half the Industrial and Commercial Bank of China and Bank of China were among the top 15 providers of syndicated loans - when a group of banks lend to a big corporate borrower.
Chinese lenders also played a bigger role in the syndicated loan market than European banks, which have been winding back their presence, figures show.
ICBC, China's biggest bank, has more than doubled its market share of the syndicated market from less than 1 per cent last year to 2.2 per cent in the June half, according to numbers from NAB and Thomson Reuters.
Bank of China has also been increasingly active, doubling its share to 2 per cent. The two banks had a bigger share than global banks, including Credit Agricole, Barclays, RBS, JPMorgan and Goldman Sachs.
Syndicated lending, worth $72 billion in Australia last year, is commonly used to fund resources and infrastructure projects, where the borrowing requirements are often too large for one bank to wear on its own.
Although the growth in Chinese bank activity is from a low base, the trend reflects the growing pool of finance coming from Australia's biggest trading partner.
NAB's head of corporate debt markets, Stephen Boyd, said a growing number of Asian banks were eyeing the growth opportunities from lending to Australian resources projects. "In the last couple of years there have been more Asian-based banks setting up branch offices in Australia, given Australia has been an attractive source of lending activity for the banks," he said.
Mr Boyd said Chinese lenders had been especially active in lending to resources projects exporting to China, following a similar path to Japanese banks in the 1980s.
"Between the three or four of them, the major Chinese banks have been quite active," he said.
KPMG's national banking sector leader, Ian Pollari, also noted that Chinese banks were increasingly lending to Australian customers.
"While they established their businesses initially to support their clients' activities in Australia ... around three-quarters of their loan books are Australian corporates," he said.
"As they build their local profiles, market knowledge and relationships with leading corporates, Chinese banks will move from participating in syndicated loans to leading mandates and doing more bilateral loan."
Japanese banks have also lifted their lending in Australia since the GFC and are the biggest source of syndicated loans after Commonwealth Bank, Westpac, ANZ and NAB.
Altogether, Chinese banks lent $1.56 billion in syndicated loans in the June half, making them the fourth-largest source of foreign finance after Japan, Britain and Canada.
Mr Pollari said the Chinese entrants were not a threat to the big four, and the local banks would have more scope to work with Chinese lenders on joint deals and other areas such as trading of the renminbi.