Australian banks are now bigger than all the Eurozone's put together

Why? It's the economy, stupid.

By Alex Hern Published 16 August 2012 12:40
A customer uses a National Australian Bank ATM. Photograph: Getty Images
A customer uses a National Australian Bank ATM. Photograph: Getty Images

The Atlantic reports that the total market cap of Australia's banks is now higher than the market cap of the Eurozone's banks. Yes, all of them.

Matthew O'Brien:

It turns out that depressions aren't so good for banks.

A big chunk of this shouldn't surprise us. European banks loaded up on subprime debt. Australian banks didn't. European banks made their own bad real estate loans. Australian banks didn't. And European banks are sitting on top of piles of dodgy sovereign debt. Australian banks aren't.

But this doesn't really make sense. It explains why Europe's financial sector fell much more in 2008 than Australia's financial sector did, but it doesn't explain why Europe's has kept falling and Australia's hasn't. The answer, as always, is that it's about the economy.

Read more over at the Atlantic.

 
 

2 comments

hugh markey's picture

Thu, 2012-08-16 18:49 — hugh markey (not verified)

Suspect it's a case of the Aussies hitchin' their wagon to the Chinese economy and then full speed ahead.
The 5th continent has a lot of tangible assets and doesn't need 'junk' values to sell it.

Damned Clever these Chinese.

Purpleline's picture

Thu, 2012-08-16 13:22 — Purpleline (not verified)

No it reflects on the type of business Australian banks are involved with, basically they do not hold a candle to British majors and Deutsche Bank.

However, that said Europe has a major problem with zombie banks who are recycling debt for funds to keep them alive with the help of the EBC. When you have zombie banks you will never have strong growth, the answer is to create clean banks, spin out Nat West from RBS in England, spin out Dresdner from Commerzbank in Germany and likewise with teh big French banks.

Then the bad bank can be held in suspension (life support) and the new clean banks can reactivate proper good banking for the benefit of the banks and economies.

The next step is to stop this nonsense that Investment bankers in Banks are similar to hedge funds, they are not, that means the rewards they receive must be cut back.

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