APRA has issued a letter to clarify its policy expectations with respect to business conducted in Australia, or with Australian customers, by foreign banks.

APRA will not license a ‘brass plate’ operation of a foreign bank as an ADI.

But APRA would not object to a foreign bank conducting business with Australian counterparties from its offshore offices provided:

• the foreign bank does not maintain an office or permanent staff in Australia, including staff employed by another entity within the banking group that conducts business on its behalf;
• the foreign bank is not soliciting business from retail customers in Australia;
• all business contracts and arrangements are clearly transacted and booked offshore, and are subject to an offshore legal and regulatory jurisdiction; and
• the foreign bank does not breach Section 66 of the Banking Act. APRA will not provide exemptions from Section 66 for foreign banks operating in Australia other than in conjunction with the limited activities of a representative office.