Everything about The State Bank Of South Australia totally explained
The
State Bank of South Australia was a
bank owned by the
Government of
South Australia. The bank was formed by the
1984 merger of two other public banks: the
Savings Bank of South Australia and the State Bank of South Australia.
In March 1988 the Bank purchased the life insurance and managed funds business
Oceanic Capital Corporation for $AU60.0M. In June 1990, the
United Building Society was purchased for $NZ150.0M.
In March 1991 the Auditor General of South Australia was appointed to conduct an inquiry to determine the causes of the State Bank's need for Government support. The report, delivered in 1993 found the key cause of financial distress was the non-performing assets of the Bank, that's its loan portfolio. These non-performing assets were corporate and property-related loans made by the Bank. The report found that 'to a lesser extent', its investments in major subsidiaries acquired between 1985 and 1990 also performed poorly and were also a contributory cause.
The auditor general did however make it clear that while these external factors were causes of the banks poor financial position it 'a contributing cause of the institution's financial failure' was the failure by the bank to adequately to manage the debt, capital, interest rate risk and
liquidity risk of the bank. The report indicated that this was because 'policy and procedural inadequacies, and the lack of effective supervision and control of certain of the Bank's activities, contribute to the mismanagement of the business of the Bank as a whole'.
In March 1991 QC Samuel Jacobs was appointed to head a
royal commission to investigate the relationship between the Bank and the South Australian Government, and the arrangements under the Bank of South Australia Act for the governance of the Bank.
SA State Bank managing director
Tim Marcus Clark ultimately took most legal responsibility for the Bank's downfall. Politically, it caused the resignation of premier
John Bannon in 1992, and the crushing electoral defeat of the South Australian
Labor government at the
1993 election.
The State Bank collapse has continued to affect South Australian finances and politics well into the next century. The State Bank debt was given as the main reason for the privatisation of
ETSA by the
Liberal government of
John Olsen, despite his election promise in 1997 that privatisation of ETSA wouldn't occur.
The saleable portion of the State Bank was acquired by
Advance Bank, which was itself bought by
St George Bank. The Bank of South Australia (also known as BankSA) is now a division and a trading name of St George Bank. Advance Bank no longer exists as an entity or brand name.
Chris Kenny, a former journalist, who has worked as advisor to
Liberal politicians
John Olsen,
Rob Kerin and
Alexander Downer, wrote "State of Denial", a book which analysed the State Bank collapse.
Further Information
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