Overview

The Banking Act 1959, enacted by the Commonwealth Parliament, addresses the regulation and oversight of banking entities operating within Australia, aiming to ensure the stability and integrity of the financial system. The Act empowers the Australian Prudential Regulation Authority (APRA) to grant or modify banking licences, impose conditions, and manage the prudential oversight of authorised deposit-taking institutions (ADIs). The legislation was introduced to fill a critical gap in the regulation of financial institutions, ensuring that banks operate within a robust regulatory framework designed to protect depositors and maintain financial stability. The policy objective behind the Act is to safeguard the financial system by overseeing the operations of ADIs, thereby preventing financial instability and ensuring the confidence of depositors and the public in the banking system.

Scope and Application

The Banking Act 1959, as applied in this Notice, pertains specifically to authorised deposit-taking institutions (ADIs) engaged in banking activities within Australia. The authority granted here is to Shinhan Bank Co., Ltd, an entity identified by its Australian Business Number (ABN). This Notice, signed by Keith Chapman as a delegate of the Australian Prudential Regulation Authority (APRA), authorises Shinhan Bank Co., Ltd to conduct banking business in Australia and imposes specific conditions on this authority. The Act applies to any ADI, including foreign ADIs operating within the Commonwealth of Australia, and the conditions imposed are intended to ensure prudential matters are managed appropriately. The scope of this legislation is strictly limited to banking activities as defined under the Act, with particular stipulations regarding the acceptance of deposits and funds from various sources, ensuring compliance with set thresholds and exclusions. The conditions are detailed in the attached Schedule and must be adhered to by Shinhan Bank Co., Ltd. in its operations in Australia. The authority and its conditions are subject to potential variation, revocation, or additional imposition by APRA, with provisions for reconsideration and review in case of dissatisfaction with APRA's decisions.

Key Provisions

The primary operative section of the document is subsection 9(3) of the Banking Act 1959, which grants Keith Chapman, as a delegate of APRA, the authority to grant Shinhan Bank Co., Ltd the right to conduct banking business in Australia. This authorisation is subject to the conditions specified in the attached Schedule, as required under paragraph 9(4)(a) of the Act. The authority granted is effective from the date it is signed. The Act imposes several obligations on Shinhan Bank Co., Ltd as an authorised deposit-taking institution (ADI). One of the main obligations, detailed in the Schedule, is that the bank cannot accept deposits or other funds for amounts less than $250,000 from any source other than incorporated entities, non-residents of Australia, its own employees, or entities with an initial balance of at least $250,000. These conditions are designed to ensure the prudential soundness and stability of the institution within the Australian financial system. Failure to comply with the conditions imposed on the Authority to carry on banking business can lead to significant consequences. Under subsection 9(6) of the Banking Act 1959, an ADI is guilty of an offence if it commits or omits to do an act that results in a contravention of a condition of its Authority, and there is no order in force under section 11 of the Act exempting the ADI from this subsection. The penalty for such an offence is set at 200 penalty units, or for a body corporate, up to 1,000 penalty units. It is important to note that this offence is indictable, and the ADI can be found guilty for each day the contravention continues, including the day of conviction. Additionally, under subsection 9(9) of the Act, decisions to impose conditions on the Authority are subject to Part VI of the Act, meaning that if a person whose interests are affected by such a decision is dissatisfied, they may seek reconsideration by APRA within 21 days of becoming aware of the decision, or within any further period allowed by APRA. If the reconsideration does not resolve the issue, the person may apply to the Administrative Appeals Tribunal for review of APRA's decision. This process ensures that the interests of the ADI are fairly considered and provides a mechanism for addressing any grievances.