Covered-Bonds law introduced to Australia as an amendment to the Banking Act

The Australian Treasury has introduced proposed legislation allowing financial companies to sell covered bonds in Australia. The government has estimated that the major Australian banks could issue up to $130 billion worth of the bonds as a result of diversifying away from volatile foreign markets.

The bill, if passed, will amend the Banking Act to allow domestic leaders to sell the debt for the first time. Further to this, the Treasurer, Mr Wayne Swan, told parliament that an increase in funding sources could prompt greater rivalry among the retail lenders.

Mr Swan stated that “this is a critical economic reform to strengthen and diversify the Australian financial system’s access to cheaper, more stable and longer-term funding,” Swan said in an e-mailed copy of a speech to parliament introducing the legislation. “Allowing our institutions another string in their bow -- to compete for funding with banks around the world -- is an absolute no-brainer.”

Read the full article here.

If you have a subscription with us, you can track the course of the bill here.

If you do not have subscription with us why not contact us today to trial our LawTracker or upcoming Banking and Finance service for free?