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THE MAIN TYPES OF FINANCIAL INSTITUTIONS IN AUSTRALIA
As at September 2008.
The main types of financial institutions in Australia are:
- Authorised Deposit-taking Institutions (ADIs)
- Non-ADI Financial Institutions
- Insurers and Funds Managers
Authorised Deposit-taking Institutions (ADIs)
|
Type of institution |
Main supervisor/ regulator |
Main characteristics |
Number of institutions |
Total assets ($b) |
|---|---|---|---|---|
|
Banks |
APRA |
Provide a wide range of financial services to all sectors of the economy, including (through subsidiaries) funds management and insurance services. Foreign banks authorised to operate as branches in Australia are required to confine their deposit-taking activities to wholesale markets. |
58 |
2,469 a |
|
Building societies |
APRA |
Building societies raise funds primarily by accepting deposits from households, provide loans (mainly mortgage finance for owner-occupied housing) and payment services. Traditionally mutually owned institutions, building societies increasingly are issuing share capital. |
11 |
20 |
|
Credit unions |
APRA |
Mutually owned institutions, credit unions provide deposit, personal/housing loan and payment services to members. |
129 |
44 |
Non-ADI Financial Institutions
|
Type of institution |
Main supervisor/ regulator |
Main characteristics |
Number of institutions |
Total assets ($b) |
|---|---|---|---|---|
| Money market corporations (merchant
banks) |
ASICb |
Operate primarily in wholesale markets, borrowing from, and lending to, large corporations and government agencies. Other services, including advisory, relate to corporate finance, capital markets, foreign exchange and investment management. | 26c |
123 |
| Finance companies (including general
financiers and pastoral finance companies) |
ASICb |
Provide loans to households and small- to medium-sized businesses. Finance companies raise funds from wholesale markets and, using debentures and unsecured notes, from retail investors. | 120c |
133 |
| Securitisers |
Special-purpose vehicles that issue securities backed
by pools of assets (e.g. mortgage based housing loans). The securities are usually credit enhanced
(e.g. through use of guarantees from third parties). |
229 |
Insurers and Funds Managers
|
Type of institution |
Main supervisor/ regulator |
Main characteristics |
Number of institutions |
Total assets ($b) |
|---|---|---|---|---|
Life insurance companies |
APRAd |
Provide life, accident and disability insurance, annuities, investment and superannuation products. Assets are managed in statutory funds on a fiduciary basis, and are mostly invested in equities and debt securities. | 32 |
179e |
General insurance companiesf |
APRAd |
Provide insurance for property, motor vehicles, employers’ liability, etc. Assets are invested mainly in deposits and loans, government securities and equities. | 129 |
133 |
Superannuation and approved deposit
funds |
APRA |
Superannuation funds accept and manage contributions
from employers
(incl. self-employed) and/or employees to provide retirement income
benefits. Funds are controlled by trustees, who often use professional
funds managers/advisers. ADFs are generally managed by professional
funds managers and, as with superannuation, may accept superannuation
lump sums and eligible redundancy payments when a person resigns,
retires or is retrenched. Superannuation funds and ADFs usually invest
in a range of assets (equities, property, debt securities, deposits). |
5,670g |
783 |
| Public unit trusts | ASIC |
Unit trusts pool investors' funds, usually into specific types of assets (e.g. cash, equities, property, money market investments, mortgages, overseas securities). Most unit trusts are managed by subsidiaries of banks, insurance companies or merchant banks. | 268 |
|
| Cash management trusts | ASIC |
Cash management trusts are unit trusts which are governed by a trust deed and open to the public and generally confine their investments (as authorised by the trust deed) to financial securities available through the short-term money market. | 45 |
|
| Common funds | State and territory authorities |
Trustee companies pool into common funds money received from the general public, or held on behalf of estates or under powers of attorney. Funds are usually invested in specific types of assets (e.g. money market investments, equities, mortgages). | 12 |
|
Friendly societies |
APRA |
Mutually owned co-operative financial institutions offering benefits to members through a trust-like structure. Benefits include: investment products through insurance or education bonds; funeral; accident; sickness; or other benefits. | 24 |
4h |
Footnotes
- Refers only to the Australian banking operations and does not include assets of banks’ overseas branches or domestic and foreign subsidiaries. Banks’ global consolidated group assets (for all locally incorporated banks and foreign bank branches) as at September 2008 were $3,056 billion. (back to top)
- The Australian Securities and Investments Commission (ASIC) does not conduct prudential supervision of these institutions, but does regulate certain aspects of their operations (e.g. compliance with the fundraising and securities licensing provisions of the Corporations Law). (back to top)
- Institutions with total assets below $50 million are not included. (back to top)
- Public sector (e.g. State Government owned) insurance offices are not covered by Commonwealth legislation, nor supervised by the Australian Prudential Regulation Authority (APRA). (back to top)
- Figure relates to total assets backing Australian policyholder liabilities on a consolidated basis which eliminates intra-group cross-investment. Total life insurance company assets on an unconsolidated basis as at September 2008 were $227 billion. (back to top)
- Total assets include public sector insurers, while the number of institutions only reflects private APRA regulated insurers. (back to top)
- Excludes assets in life office statutory funds, pooled superannuation trusts, non-regulated public sector funds and self-managed superannuation funds (which have less than five members); self-managed funds are regulated by the Australian Taxation Office. Data collated on a consolidated basis which eliminates intra-group cross-investment. Total superannuation and approved deposit fund assets on an unconsolidated basis as at September 2008 were $943 billion. (back to top)
- Figure relates to total benefit fund and management
fund assets. (back to top)
