Australian banks are operating in an environment where they face an ongoing risk of funding constraints, a leading banker said yesterday.National Australia Bank's group executive for business banking, Joseph Healy, said big Australian banks were reliant on offshore term debt and were among the largest global debt issuers.Speaking at the Corporate and Business Banking Forum, held in Sydney yesterday, Healy said the banks faced the risk that the appetite from offshore investors for Australian bank paper would diminish."Credit growth of eight per cent a year over the next few years would increase the need for wholesale term funding among big local banks from $140 billion this year to $320 billion in 2014," he said.If that level of wholesale funding could not be found, the shrinkage of bank balance sheets would limit the availability of credit and have an impact on the economy.This would be felt most strongly by business, which was already suffering from a bias towards the provision of household over business finance."We need to recognise that there is a bias in lending towards the household sector, which is a result of the Basel II capital rules," Healy said."In 2000, for every $1000 of lending to households there was the same amount of lending to business. Now for every $1000 of lending to households there is $600 of lending to business."