Australian banks 'at risk'
Australia's banks could be at risk to many of the factors that caused the near collapse
of financial systems in many Western countries.
A report published by leading independent research firm CreditSights, shows how despite a fall in business lending over the last year, Australia's banks exposure to housing loans has increased to almost 60pc of the total outstanding credit.
From 43pc of total credit in 1999, housing loans now make up 58pc of the Australian banking systems lending, helping fuel a continued boom in house prices, which have doubled since 2002.
To fund this lending, Australian banks have come to depend increasingly on the international capital markets.
From 9pc of the Australian banking system's total funding in 1999, international bond issues now account for 18pc, and the country's banks have become among the largest bond issuers on the global markets.
With about $150bn (£98bn) of bonds to sell in the next year, CreditSights warns investors may be reaching their capacity.
"There is a problem here and it's hard to say where it will all end," said David Marshall, an analyst at CreditSights.
"It could lead to higher borrowing costs for the banks, which they would have to pass on to customers, which could lead to house prices slowing, but the general point is that they need to diversify their businesses."
Steve Keen, a Sydney-based economist, is one who thinks the Australian banking sector is overdue a crash, and on his blog Debtwatch last month warned that the record profits being generated by some banks were a sign of "economic sickness, not health".
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