Australia regulator 'demands contingency plans for banks'

20 July 2011

Banks in Australia have been asked to draw up contingency plans by the country's banking regulator.

The Australian Prudential Regulation Authority (APRA) has requested the lenders come up with the proposals to counter any effects that another financial crisis would have on the sector.

APRA said the nation's four largest institutions - National Australia Bank, Westpac, Commonwealth Bank of Australia and ANZ - need to consider how they would dismantle and sell their businesses if such a situation arose.

Colleen Cassidy, Australian banking analyst at financial services group Promontory - which has offices around the world, including in London and New York - told ABC Online the move is aimed at getting organisations in order, "so that if there's either a market crisis or a crisis that's specific to the organisation that they can work through it in an orderly way".

She added there is often moral concern when it comes to governments being seen to lend support to large financial groups in times of turmoil.

By Claire Archer

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