Australia's banking sector has its eyes firmly fixed on the year 2007. That is when the current 20 per cent foreign investment limit in China's domestic banks will be lifted.
Australia's four leading banks are constrained by the inability to merge with each other and by a limited domestic market of 20 million people. So they are viewing mainland China, albeit cautiously, as a potential financial gold mine. That is no wonder, given that the mainland's banking sector has about US$4.5 trillion in assets and some US$1.6 trillion in bank deposits.
So the results of a recent survey on Chinese attitudes to foreign banks will no doubt give the Australian banking sector some cause for optimism. In a poll of 4,000 people by Beijing-based market research firm dragondata, 63 per cent of respondents said a foreign partner would make their bank more reliable; 67 per cent said an alliance would result in better products.
According to dragondata, Australian financial institutions and business generally are seen in a favourable light by mainland consumers. The survey will provide the Australian banking sector with reassurance that foreign banks are going to be welcomed by Chinese customers.
This is good news for the 'big four' Australian banks that dominate the domestic market here. These banks - Commonwealth, ANZ, National and Westpac - are constrained from further growth by a government policy called the 'four pillars' rule, introduced 23 years ago.
The policy was designed to prevent any of these banks from merging with each other. Given the Australian community's hostility to the conduct of banks - particularly in relation to branch closures in rural areas - it is not a policy that is likely to be overturned any time soon.