RDP 2001-07: A History of Last-Resort Lending and Other Support for Troubled Financial Institutions in Australia Appendix A: Financial Disturbances in Australia – A Chronology

Bryan Fitz-Gibbon and Marianne Gizycki

October 2001

Date Institution Incident Public sector response
1826 &
1828		 Bank of New
South Wales		 The bank experienced severe liquidity problems. The colonial government granted the bank loans to cover its short-term illiquidity.
1843 Colonial trading banks The Bank of Australia, Derwent Bank, Port Phillip Bank, Sydney Banking Company, Colonial Bank, Archers Gilles and Company and Royal Bank of Australia failed. In NSW, legislation was passed relaxing the treatment of insolvents and allowing movable property to be mortgaged to increase the supply of securities that banks could hold.
1843 Savings Bank of NSW The trading bank failures led to a run on the Savings Bank. Government guarantees of the trustees were extended.
1852 South Australia Illiquidity due to gold rushes in neighbouring colonies. Gold ingots were declared legal tender for one year.
1866 Queensland Colonial government financing crisis. The Bank of Queensland failed. Temporary issue of government notes which were not legal tender.
1879 Provincial and Suburban Bank, Australian and European Bank, City of Melbourne Bank The Provincial and Suburban Bank and the Australian and European Bank failed. The City of Melbourne Bank suffered a depositor run. The Associated Banks provided no aid to Provincial and Suburban and limited assistance to the Australian and European Bank. A public statement of support for the City of Melbourne Bank by the Associated Banks stemmed the run.
1886 Commercial Bank of South Australia Failed due to bad debts and fraud. The failure also triggered a run on the Savings Bank of South Australia. The Associated Banks declined assistance.
1893 Banks, building societies and finance companies Of the 23 banks of issue, 13 were forced to suspend payment. In Victoria, a week-long banking holiday was declared. NSW declared banks notes to be legal tender and allowed depositors to convert suspended deposits into Treasury notes.
1893 & 1895 Queensland National Bank Bad loans and accounting fraud caused the bank to fail. The Queensland Government guaranteed the bank's deposits for one year.
1931 Government Savings Bank of NSW The NSW State Government's political and financial problems led to a deposit run. The Government Savings Bank merged with the Commonwealth Bank.
1931 Primary Producers
Bank of Australia		 Anticipating a run, the bank approached the Commonwealth Bank for assistance. The Commonwealth Bank provided a small loan but declined further requests for support.
1931 The Federal Deposit Bank The bank suffered a run following the run on the Government Savings Bank. The bank was denied Commonwealth Bank support.
1931 State Savings Bank of Western Australia The bank suffered a run following the closure of the Government Savings Bank. The State Savings Bank merged with the Commonwealth Bank.
1974 Banks and building societies The property market crash. The Reserve Bank established a liquidity facility for all banks and an additional line of credit for banks that were providing support to building societies. These lines were drawn upon.
1977 Queensland building societies Problems were experienced by several Queensland building societies due to bad loans. The Reserve Bank issued a press release stating its support for banks that provide liquidity to building societies.
1979 St. George Permanent Building Society In March 1979, a run developed following a radio broadcast of rumours of its imminent collapse. The Acting Federal Treasurer issued a press release noting the Reserve Bank's support for banks that provide liquidity to building societies.
1979 Bank of Adelaide The bank suffered large losses in its subsidiary Financial Corporation of Australia. The Reserve Bank arranged a merger of the bank with the ANZ and provided a liquidity facility.
1987 Challenge Bank These banks were subject to rumours about their solvency leading to deposit runs. In each case, the Reserve Bank issued a media release denying the rumours and stating that depositors were fully protected.
1990 Bank of Melbourne    
1990 Metway Bank    
1990 Farrow Corporation Following depositor runs the Farrow group of building societies failed. The Victorian Government made payments to unsecured depositors. The Reserve Bank issued a statement distancing other societies from the Farrow group's problems and reiterating its support for banks that provide liquidity to building societies.
1990 State Bank of Victoria Both banks incurred large losses from non-bank subsidiaries. The state governments injected funds to cover the losses. The banks were eventually sold.
1991 State Bank of South Australia  
1992 R&I Bank The R&I Bank of Western Australia incurred losses. The Reserve Bank issued a press release noting the WA Government guaranteed the bank's deposits, and stating that the Bank would take whatever steps were necessary to ensure the R&I had adequate liquidity.