With the recent demise of the Silicon Valley Bank (SVB) in the US and Credit Suisse (CS) in difficulty, it’s prudent to consider the Australian banking sector. The banking sector in Australia is generally considered to be strong and safe. Australia has a well-regulated banking system, which has helped to insulate it from some of the major shocks that have impacted other countries’ banking systems in the past.

The Australian Prudential Regulation Authority (APRA) is the primary regulator of banks in Australia, and it imposes strict capital requirements, risk management standards, and governance standards to ensure that banks are safe and sound. The Reserve Bank of Australia (RBA) is responsible for monetary policy and oversees the stability of the financial system.

Furthermore, the Australian government provides a guarantee on deposits up to a certain amount in the event that a bank fails, which provides an added layer of protection for depositors.

Despite this, it is important to note that no banking system is completely immune to risk, and there have been instances of misconduct and fraud in the Australian banking sector in the past. It is therefore important for individuals to remain vigilant and carefully assess the risks associated with any financial institution or investment opportunity before committing their money.

Based upon our reading of economic commentators, it seems that particularly SVB is a victim of poor management ie. offering long term bonds at low yields which subsequently devalued in a time of rising official interest rates. In addition, compared to the small number of banks in Australia, there are over 4,000 banks in the US, many community and state based (much like our old building societies) which makes regulation more difficult.