TD Securities, the Australian arm of Canada's TD Financial Group, is winding down its Sydney branch, as well as its Tokyo office, and consolidating operations in Singapore.
With about $2 billion in assets in Australia, according to APRA data, TD Securities is at the smaller end of foreign banks supplying capital to Australian corporates.
TD's action is symptomatic of the debate over the extent to which foreign banks are cutting back on their allocation of capital to their Australian businesses, and the extent to which that matters.
There have been few definite retreats among foreign banks though Société Générale, ABN Amro, HVB and maybe Lloyds TSB, owner of BOS International, are to some extent curtailing their Australian businesses.
Some other foreign banks - such as Citigroup, whose CEO Stephen Roberts was interviewed in this newsletter last week - doubt that there's much withdrawal of foreign bank capital and think that in any event other foreign banks may yet plug the gap.
For its part TD has told other media outlets that it will continue to service Australian corporate loans, though how assertively it will pursue new lending business in Australia is unclear.
Discussions, meanwhile, continue over the merit and detail of any Australian government investment in corporate loans to plug the presumed funding gap in the corporate loan market.
The Australian reported that the Treasurer, Wayne Swan, said yesterday that "It's not required at the moment but should that [funding] gap open up, action will be taken and we will announce it at that time."
Major banks have been pushing the Australian government to participate in refinancing select corporate loans since November.
The capacity of big banks to fund may have improved since then, given the level of offshore bond sales (using the government guarantee) undertaken by banks over the last six weeks.
There is also effort by banks and investment banks to make bigger borrowers wear the elevated interest rates they may incur and to sell debt in their own name into the corporate bond market.
In the same article in The Australian, Westpac's head of institutional banking, Phil Chronican, pushed this theme.
"The ideal outcome is to get the capital markets investing... into debt that would help take the pressure off the banks," Chronican said.
"The government wants to support some kind of bridging finance over the next couple of years to plug the gap and encourage the foreign banks to stay in Australia. The government and the banks are looking to co-operate to address this issue."