Banking in Australia is a central component of the country's financial system and one of the most concentrated banking sectors in the world. the sector contributes 7.5% of GDP and employs 450,000 people.
The industry is dominated by the “Big Four” banks; Commonwealth Bank, Westpac, Australia & New Zealand Bank, and National Australia Bank, which together hold the majority of deposits and lending. The sector is regulated by the Reserve Bank of Australia (RBA), which manages monetary policy and financial stability, and the Australian Prudential Regulation Authority (APRA), which oversees prudential standards. Australian banks are noted for their profitability, systemic importance, and resilience, particularly during the global financial crisis of 2007–2008.
Banking in Australia has its origins in the early nineteenth century, when colonial banks were established to support trade, settlement, and pastoral expansion. The sector experienced rapid growth but also instability, culminating in the banking crisis of 1893, which led to widespread bank failures and restructuring. Through the twentieth century, the system was shaped by government intervention, wartime controls, and the establishment of the Commonwealth Bank as both a commercial and central bank. Post-war reforms and the creation of the RBA in 1959 marked the beginning of a modern regulatory framework.
From the 1980s, financial deregulation transformed the industry. The removal of interest rate controls, floating of the Australian dollar, and entry of foreign banks increased competition and innovation. At the same time, prudential regulation was strengthened to safeguard stability, with APRA created in 1998 to supervise banks, insurers, and superannuation funds. The sector has since embraced digital banking, electronic payments, and online services, making Australia one of the more technologically advanced banking markets.
Despite its strength, the industry has faced scrutiny over misconduct, consumer protection, and market concentration. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (2017–2019) exposed widespread failings and led to significant reforms. Australian banks continue to play a pivotal role in the Asia–Pacific region, balancing domestic stability with international expansion. The sector remains a subject of debate over competition, regulation, and its role in supporting sustainable economic growth.
Financial institutions
Deregulation of the financial sector commenced in the mid-1960s, with the removal of the distinction between and separation of trading and savings banks. Building societies were allowed to take deposits from the public. Banking in Australia is notable by the small number of large banks in the market. Much of this concentration is the result of bank acquisitions. English, Scottish and Australian Bank was acquired by the ANZ Bank in 1970. In 1982, the Bank of New South Wales merged with the Commercial Bank of Australia to form Westpac. There were many other bank mergers and acquisitions throughout Australia's banking history. Beginning in the 1980s, several building societies sought to convert to banks, but were required to demutualise before they were permitted to do so. This included NSW Building Society, which became Advance Bank, St George, Suncorp, Metway Bank, Challenge Bank, Bank of Melbourne and Bendigo Bank. A change in regulations allowed building societies and credit unions to become banks without having to demutualise, and several including Heritage Bank have converted since 2011 while retaining their status and structure as mutual organisations.
Big four banks
In 1990, the government adopted a "four pillars policy" in relation to banking in Australia and announced that it would reject any mergers between the big four banks.Press Release: RELEASE OF THE REPORT OF THE FINANCIAL SYSTEM INQUIRY AND INITIAL GOVERNMENT RESPONSE ON MERGERS POLICY This is long-standing policy rather than formal regulation, but it reflects the broad political unpopularity of further bank mergers. A number of commentators have argued that the "four pillars policy" is built upon economic fallacies and works against Australia's better interests.
The four pillars policy does not prevent the four major banks from acquiring smaller competitors. In 2000, CBA acquired the Colonial Group, which had emerged as a major bank–insurance combine in the 1990s, after the Colonial Mutual insurance group took over State Bank of New South Wales in 1994. The Commonwealth Bank also acquired the State Bank of Victoria in 1990 and Bankwest in 2008. Westpac acquired Challenge Bank in 1995, Bank of Melbourne in 1997, and St George Bank in 2008.Westpac-St George merger won't topple four-pillars , The Age, 15 May 2008
Currently, banking in Australia is dominated by four major banks: Commonwealth Bank, Westpac, ANZ Bank and the National Australia Bank. The top four banking groups in Australia ranked by market capitalisation at share price:
Rank Company Market capitalisation (2025) Cash earnings (2025) Total assets(2025) 1 Commonwealth Bank (CBA) A$254.80 billion A$10.13 billionA$1,353.80 billion 2 Westpac (Westpac) A$127.46 billion A$6.92 billion A$1,125.36 billion 3 National Australia Bank (NAB) A$122.15 billion A$6.76 billion A$1,109.06 billion 4 Australia & New Zealand Banking Group (ANZ) A$102.14 billion A$5.93 billion A$1,297.11 billion
Medium banks Since 2000, there have been between 5 and 7 medium banks operating in Australia, defined as holding between 1% and 10% of resident assets. The 5 banks in this category have an aggregate market share of around 12%. As of September 2024, there were five medium banks operating in Australia: Macquarie Bank Bank of Queensland Bendigo and Adelaide Bank ING Australia HSBC Australia
These medium banks include two regional banks, the Bendigo and Adelaide Bank and the Bank of Queensland (including its retail arms ME Bank and Virgin Money). Macquarie Bank is part of the larger financial services group, Macquarie Group, while two other medium banks are subsidiaries of large foreign banks, such as ING Australia and HSBC Bank Australia.
Former medium banks include Bankwest and St George Bank, acquired by the Commonwealth Bank and Westpac respectively in 2008, and Citibank Australia, acquired by NAB in 2022. Suncorp was also acquired in 2022 by ANZ.
Mutual banking in Australia The Customer Owned Banking Association (formerly known as Abacus Australian Mutuals) is the industry body representing 48 credit unions, building societies and mutual banks that constitute the Australian mutual or cooperative banking sector. Due to a large number of mergers, the number of individual member-owned banking institutions in Australia has been decreasing since the beginning of the twenty-first century, from 185 institutions in 2004 to 54 in 2024.
Mutual banks hold two-thirds of the 6% of assets held by small and very small banks. Collectively, Australian customer-owned banks service 5 million customers or 'members' (as they are mutual shareholders in the institutions); they are the primary financial institution for over 10% of Australians and they run 18% of all bank branches.
The largest customer-owned banks in Australia are: Rank Institution Total assets (July 2026) Members (July 2026) Also trading as 1 People First Bank A$29.901 billion >740,000 • People's Choice • Heritage Bank 2 NGM Group A$27.868 billion >600,000 • Greater Bank • Newcastle Permanent 3 Great Southern Bank A$25.988 billion <420,000 • Credit Union Australia Ltd 4 Bank Australia A$23.554 billion 196,160 • Qudos Bank 5 Teachers Mutual Bank A$16.714 billion >280,000 • Australian Mutual Bank • Health Professionals Bank • Firefighters Mutual Bank • UniBank 6 Beyond Bank A$16.632 billion 334,779 • Family First Bank 7 P&N Bank A$11.757 billion ~125,000 • BCU Bank • Police & Nurses Ltd 8 IMB Bank A$11.174 billion ~219,000 9 Regional Australia Bank A$6.377 billion >100,000 • Summerland Bank • Macquarie Credit Union 10 Defence Bank A$5.389 billion >81,000 11 Unity Bank A$4.919 billion >60,000 • G&C Mutual Bank • Reliance Bank 12 Bank First A$4.838 billion 90,855 • Victorian Teachers Ltd
A number of credit unions and building societies changed their business names to include the word 'bank', to overcome adverse perceptions of smaller deposit-taking entities. For example, in September 2011 Bank Australia (formerly Bankmecu) was announced as Australia's first customer-owned bank. Three teachers' credit unions have become known as 'banks'; namely, RACQ Bank (formerly the Queensland Teachers' Credit Union), Bank First (formerly the Victoria Teachers' Credit Union), and Teachers Mutual Bank (formerly Teachers Credit Union). The Police & Nurses' Credit Union began trading as P&N Bank in March 2013, and some credit unions are electing to use 'mutual banking' as a business tagline, rather than as a business name, as they do not meet the criteria to be called a 'bank'.
Foreign banks Foreign banks wishing to carry on a banking business in Australia must obtain a banking authority issued by APRA under the Banking Act, either to operate as a wholesale bank through an Australian branch or to conduct business through an Australian-incorporated subsidiary. Foreign banks engaging in retail banking require a full banking licence. Foreign banks which do not wish to obtain a banking authority in Australia may operate a representative office in Australia for liaison purposes, but the activities of that office will be restricted.
According to the Foreign Investment Review Board, foreign investment in the Australian banking sector needs to be consistent with the Banking Act, the Financial Sector (Shareholdings) Act 1998 and banking policy, including prudential requirements. Any proposed foreign takeover or acquisition of an Australian bank will be considered on a case-by-case basis and judged on its merits.
There are a number of foreign subsidiary banks, however only a few have a retail banking presence; ING Bank (Australia) Limited (trading as ING), HSBC Bank Australia (a subsidiary of HSBC), Delphi Bank (formerly the 'Bank of Cyprus Australia', and in 2012 acquired by Bendigo & Adelaide Bank), Bank of Sydney (with a full banking licence since 2001) have a small number of branches.
Foreign banks have a more significant presence in the Australian merchant banking sector.
Regulation
Formally, there is extensive and detailed regulation of Australia's banking system, split mainly between the Australian Prudential Regulation Authority (APRA) and Australian Securities & Investments Commission (ASIC). The Reserve Bank of Australia also has an important involvement. However, in practice, banks in Australia are self-regulated through external dispute resolution (EDR) schemes, the most prominent of which is the Australian Financial Complaints Authority (AFCA).
APRA is responsible for the licensing and prudential supervision of authorised deposit-taking institutions (ADIs) (banks, building societies, credit unions, friendly societies and participants in certain credit card schemes and certain purchaser payment facilities), as well as life and general insurance companies and superannuation funds. APRA issues capital adequacy guidelines for banks which are consistent with the Basel II guidelines. All financial institutions regulated by APRA are required to report on a periodic basis to APRA. Certain financial intermediaries, such as investment banks (which do not otherwise operate as ADIs) are neither licensed nor regulated under the Banking Act and are not subject to the prudential supervision of APRA. They may be required to obtain licences under the Corporations Act 2001 or other Commonwealth or State legislation, depending on the nature of their business activities in Australia.