Media Release Foreign Bank Representative Offices

In addition to establishing subsidiaries or branches which are authorised under the Banking Act 1959 to conduct banking business in Australia, foreign banks are permitted to establish representative offices in Australia. At present, 51 foreign banks maintain representative offices in Australia.

In line with moves by overseas supervisors, the Reserve Bank has decided to clarify and strengthen the conditions attaching to the operation of foreign bank representative offices in Australia, and the entry criteria for foreign banks wishing to establish such offices. Central to the guidelines – contained in Prudential Statement J3 ‘Representative Offices of Foreign Banks’ – is the principle that the business of a representative office must be confined to the conduct of purely liaison activities. In particular, there is a prohibition on representative offices carrying on banking business (which includes a prohibition on accepting deposits).

A foreign bank wishing to establish a representative office in Australia must now obtain registration as a foreign company under the Corporations Law. Foreign banks already having representative offices here must obtain such registration within twelve months of the date of this announcement.

The revised entry criteria, which are effective from end October 1997, and the conditions which attach to the operation of all representative offices in Australia, are set out in the attached Prudential Statement.