Aussie banks focused on Asia - RBA

AUSTRALIA'S big banks are getting increasingly involved in Asia.

Exposure of Australian-owned banks to Asia was $112 billion in December 2012, up $27 billion from five years earlier, the Reserve Bank of Australia says.

Almost all of the increase is accounted for by the big four Australian banks.

In its half-year financial stability review on Wednesday, the RBA says the key motivation for the banks' move into Asia is the large and growing trade and investment flows between Australia and Asia.

"Accordingly, the banks have been focusing on providing cross-border banking services, such and trade finance and foreign exchange, to their corporate clients engaged with trade and other business in Asia, as well as to Asian companies with businesses in Australia," the RBA said.

"Some of them have also been targeting foreign companies doing business in Asia, aiming to capitalise on the large and fast-growing intra-Asian trade and investment."

The RBA said this growth in Aussie bank activity is likely to continue over the longer term as the growth in trade continues.

It said that this could be beneficial for the banks as it helps diversify their earnings.

"However, moving into any new market poses a range of risks that banks need to manage carefully," the RBA said.

"These risks would probably be heightened if expansion were overly rapid and not backed up by a deliberate and well-founded strategy."

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