Council of Financial Regulators Annual Report – 2000 Appendix C

Main Types of Financial Institutions
as at December 2000

Type of Institution
Main Supervisor/

Main Characteristics
No. of Active Groups(a) 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. 45 760(b)
Non-bank financial intermediaries
Building societies APRA Building societies raise funds primarily by accepting deposits from households, provide loans (mainly mortgage finance for owner-occupied housing) and payments services. Traditionally mutually owned institutions, building societies increasingly are issuing share capital. 18 13
Credit unions APRA Mutually owned institutions, credit unions provide deposit, personal/housing loan, and payment services to members. 211 23
Money market corporations (‘merchant banks’) ASIC(c) 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.
40(d) 77
Finance companies Finance
(including general financiers)
ASIC(c) 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.
61(d) 74
Securitisers Special purpose vehicles that issue securities backed by pools of assets (eg mortgage-based housing loans). The securities are usually credit enhanced (eg through use of guarantees from third parties). 52 72
Funds and managers and insurers
Life insurance companies APRA(e) 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. 36 182
Superannuation and approved deposit funds (ADFs) 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 super funds, 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). 12,502 292(f)
Public unit trusts ASIC(c) Unit trusts pool investors' funds, usually into specific types of assets (eg equities, property, money market investments, mortgages, overseas securities). Most unit trusts are managed by subsidiaries of banks, insurance companies or merchant banks. 240 135
(common funds)
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 (eg money market investments, equities, mortgages). 16 7
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; health; funeral; accident; sickness; or other benefits. 44 6
General insurance companies APRA(e) Provide insurance for property, motor vehicles, employers' liability, etc. Assets are invested mainly in deposits and loans, government securities and equities. 108 63
(a) Subsidiaries of an institution undertaking the same activity are treated as part of a single group.
(b) Refers only to the Australian banking operations and does not include assets of banks' overseas branches or domestic and foreign non-bank subsidiaries. Banks' global consolidated group assets (for all locally incorporated banks and foreign bank branches) at December 1999 were $937 billion.
(c) ASIC does not conduct prudential supervision of these institutions, but does regulate certain aspects of their operations (eg compliance with the fundraising and securities licensing provisions of the Corporations Law).
(d) As at December 1999, groups with total assets below $50 million are not included.
(e) State Government-owned insurance offices are not covered by Commonwealth legislation, nor supervised by APRA.
(f) Includes assets in life office statutory funds, but excludes 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 Tax Office. Total superannuation assets were estimated to be around $496 billion as at December 2000.