Australia OKs 16 Foreign Banks to Open Retail Units

Australia on Wednesday granted 16 foreign banks permission to open full-service banks, a long-awaited move opening that nation’s strictly regulated financial system to increased competition.

Five of the banks are American and the rest are from Singapore, Hong Kong and Japan.

Until now, foreign banks were restricted to investment services and limited lending to businesses. Wednesday’s announcement clears the way for the opening of branches of major foreign banks to collect deposits, offer checking accounts and write consumer loans.

BankAmerica Corp., through its subsidiary BA Australia Ltd., said it plans to establish consumer banking centers in partnership with G. J. Coles & Co., Australia’s largest discount retailer. The bank will offer financial services, including automated teller machines, inside Coles stores starting early next year. Initial investment is expected to be about $100 million.

Citibank, Chase Manhattan Bank, J. P. Morgan & Co. and Bankers Trust Corp. also plan to open Australian branches offering a full range of banking services for businesses and individuals.