The Commonwealth Bank of Australia was, until December 2008, the largest domestic bank in Australia. The Commonwealth Bank commenced trading in 1912, and was originally founded under the Commonwealth Bank Act of 1911.
Given the empowerment to conduct savings and general banking/trading banking practices, it was the only Australian banking institution at that time to incorporate both forms of banking. The Commonwealth Bank was also the only bank at that time with a Federal Government guarantee.
History of the Commonwealth Bank
Beginning operations with a solitary branch in Melbourne and offering savings bank facilities, customers were given the opportunity to conduct business via local post offices around Australia, which acted as Commonwealth Bank branch agencies.
In 1916, the Commonwealth Bank moved its operational headquarters from Melbourne to Sydney and in 1920, the responsibility for Note Issue was transferred to the Commonwealth Bank from the Commonwealth Treasury, which effectively expanded its operations to those of a Central Bank.
The Commonwealth Bank expanded quickly, following mergers and acquisitions of the State Bank of Tasmania in 1913, the Queensland Government Savings Bank in 1920, the State Savings Bank of Western Australia in 1931 and the Government Savings Bank of NSW in 1931.
During 1959, some controversy arose from the Bank’s doubled-up functions as both Central Bank and Savings Bank and legislation was changed to the original Commonwealth Banks Act of 1911 to form both the Commonwealth Banks Act of 1959 as well as the Reserve Bank Act 1959 to create two distinctly separate operations.
The Reserve Bank of Australia commenced operations in January 1960 and took over the central banking functions, leaving the Commonwealth Bank with the remaining savings bank, and trading bank business.
Australia’s switch to decimal currency in February of 1966 also heralded an expansion of the Commonwealth Bank’s product offerings to include personal loans and some variations on the old traditional savings accounts and facilities. By the 1970’s the Commonwealth Bank had added home insurance, travel insurance and lending products to its banking operations, forming its own finance company in 1974.
The Australian banking industry was de-regulated in the mid-1980s and the Commonwealth Bank was forced to restructure the majority of its banking product offerings to compete with the entry of foreign banks into the country and to appeal more widely to the banking needs of new customers outside their traditional customer base. By the late 1980s, the Commonwealth Bank had incorporated managed investments and life insurance products to its already diverse product offerings.
In 1991, the Commonwealth Bank merged with the State Bank of Victoria and effectively became Australia’s largest domestic bank. Establishing vital banking representation points in New York, Tokyo, and Singapore, the Commonwealth Bank expanded foreign exchange dealings to increase services available to customers overseas.
The Commonwealth Bank from 2000 Onwards
Commonwealth Bank merged with Colonial Limited, which was formerly known as Colonial Mutual, in 2000, which increased its asset management capability and allowed access to a pre-eminent wealth brand. This led to the creation of the Investment and Insurances division, which enabled an inclusion of managed funds, master funds, superannuation, and further insurance product to be added to the list of products offered to customers.
The Bank also raised its ownership percentage to 100% of New Zealand’s ASB Bank in 2000.
During 2002, the Commonwealth Bank continued its foreign expansion strategy into China, India, Indonesia, and Vietnam.
The most recent merger of Western Australia’s Bank West in 2008 further strengthened the Commonwealth Bank’s leadership in retail branch banking, although the merger between the Westpac Banking Corporation and St. George Bank in December 2008 saw the Westpac Bank take over the Commonwealth Bank’s historical position as the largest domestic bank in Australia.