The Australian government may contribute up to $2.5 billion to a special purpose fund that would refinance select corporate loans at present part funded by foreign banks, the Financial Review reported.
The fund may prioritise loans to the commercial property sector the finance minister, Lindsay Tanner, suggested in a series of media interviews yesterday.
The AFR reported the fund may be up to $5 billion in size, with the government and major banks funding half each.
The Australian reported that the major banks may contribute up to $500 million each, suggesting the fund may be a little smaller.
The Australian also identifies National Australia Bank and Westpac as two banks lobbying most assertively for government involvement in the proposed fund.
The scope of the proposed fund is significantly smaller than the notional level of syndicated lending funding by foreign banks and, on some interpretations, in need of refinancing outside the current capacity of the banking sector and debt capital markets.
In a briefing for several newspapers yesterday Cameron Clyne, managing director of National Australia Bank, acknowledged some uncertainty over the scope of the problem that the banks are pushing the government to address.
"At the moment it's hard to determine what's myth and what's reality," Clyne said, and quoted in the
Herald Sun.
"There are people talking about foreign banks exiting but there is actually limited evidence that it is going to occur.
"A lot of these foreign banks are long-term players in the Australian market and they are also participants in the government guarantee for deposits."
Clyne said the proposal should be viewed as a proactive measure.
"It's more about being quick to react if it emerges as an issue," he said. "It's a possibility that might occur because what we are seeing is an unprecedented situation."