Australia's Oldest, Biggest Bank Is a Sydney Mainstay
If any evidence were needed that Sydney is Australia's principal banking center, it can be found in Westpac Banking Corp.
Westpac, the nation's biggest bank, with assets approaching $100 billion, has been based in Sydney throughout its 174-year history, having originally been founded as the Bank of New South Wales.
It was also Sydney's first public company.
Stuart Fowler, managing director and chief executive of Westpac, said he believes in Sydney for a variety of reasons as the only place in Australia worthy of consideration for a bank's headquarters.
An Active Currency
"I suppose if you're talking about Sydney being a financial center, you've got to look at the currency, and the currency is the sixth-largest-traded currency in the world," Mr. Fowler said. "And that is quite extraordinary when you relate it to Australia's proportion of the world's gross national product.
"There is an enormous interest in the Australian dollar, with the Australian banks and other participants in the Sydney market; and in our time zone, particularly investments coming from Southeast Asia, that does add value to a Sydney focus on that particular aspect."
Mr. Fowler also said he believes that, from a trading standpoint, Sydney is vital.
Australian trade is heavily oriented toward Asia, with about 55% of the country's trade going into Japan, Taiwan, South Korea, Hong Kong, and Thailand.
"We are an enormous producer of commodities going into those markets, so if you're going to be in the commodities market, there is sense in being in Sydney," Mr. Fowler said.
He said he is proud not just of his own bank's achievements but also of all the major Australian banks.
The Australian banking system differs markedly from that of the United States, more closely resembling the Canadian and British models.
Four clearing institutions, or trading banks, as they are known in Australia, dominate the marketplace, especially at the retail level, where the entry of 15 foreign banks in 1985-86 made little impact.
Although Australia is federated in the same way as the United States, banks are not subject to cross-border restrictions, apart from minor differences in consumer credit legislation.
Large Banks' Dominance
"Australia has a banking system with a small number of large universal banks providing a whole range of products," Mr. Fowler said. "The four major clearing banks provide an absolutely first-class service unheard of in the U.S."
Mr. Fowler added that the Australian clearing system, which is largely electronic, is "probably the most sophisticated in the world. Australian-based banks have been instrumental in arranging finance for a whole gamut of major projects in Australia over the last 25 years, so the expertise is here for financing large-scale projects."
When Westpac entered its second century of trading 50 years ago, Sydney was not considered the financial capital of Australia.
"Melbourne was quite clearly the financial capital of Australia," Mr. Fowler acknowledged," and it now no longer is. Sydney is taking over hour by hour. Even 20 years ago, the bulk of the top major companies would have been headquartered in Melbourne.
"Now, when you look down the list of the top 20, 13 are in Sydney.
"So clearly, there has been a change in the balance, and that's been reflected by the foreign banks, the merchant banks, and stock brokers who've come in."
An important reason for its rise is Sydney's position as the principal gateway to Australia, with by far the best direct air links to the United States and Asia.
"That adds very much to the prominence of Sydney," Mr. Fowler said. "Likewise, Sydney is close to Canberra (the political capital of Australia, akin to Washington, D.C.).
"It's only 35 minutes by air, and in the case of major corporations like ourselves, you obviously want to have reasonably convenient access to the federal government," Mr. Fowler said.
Surplus of Office Space
Another attraction of Sydney at present, as Mr. Fowler pointed out, is a surplus of good-quality office space left over from the property boom of the late 1980s, which saw Sydney turned into what many visitors described as a gigantic building site.
Now, office space has never been more readily available.
"It's easy at the moment to get very high-class office accommodation in Sydney very cheaply, where landlords are willing to do very attractive deals," said Mr. Fowler. He also commented that he views the cost of office space in Tokyo or Hong Kong as "outrageous."
"And Singapore is getting more expensive now, too," he added.
Although Australia has been suffering from a recession since early 1990, Mr. Fowler said he thinks Sydney has borne the brunt of it much better than Melbourne, whose economy has been hit hard by the slump.
"Sydney, corporately, has come through the downturn much more strongly and with more stability than Melbourne," Mr. Fowler said. "The New South Wales state government's fiscal and management policies are clearly much better than most."