Prime minister, Kevin Rudd, announced the establishment, in partnership with the four major banks, of the $4 billion Australian Business Investment Partnership (ABIP).
ABIP, which should be operational by March, will be established to provide finance to viable commercial property developers who need to roll over loans from foreign banks that are predicted to exit the Australian market over the next two years.
The banks will provide $2 billion and the federal government another $2 billion to provide financial support for major commercial property projects including shopping centres, office towers and factories.
It would reduce the risk of Australian banks having to “fill the gap” if foreign banks did not roll over their share of loans.
Mr Rudd said lending by overseas banks represented half of the $285 billion in syndicated loans issued to Australian businesses since 2006.
“Of those outstanding loans $75 billion is set to fall due over the next two years,” he said.
“If foreign banks do not roll over their share of these loans it would be difficult for Australia’s four major banks to fill this gap on their own.
" The mathematics is fairly straightforward."
Foreign banks carried more than $48 billion or 28 per cent of lending to the Australian commercial property sector and were seeking to reduce their exposures, Mr Rudd said.
The ABIP may raise an additional $30 billion by resorting to bond markets; it will help provide overall stability and confidence for the commercial property sector.
The fund will concentrate on the completed commercial property investments and partly completed projects with secured pre-commitments. The credit and risk criteria for ABIP will be developed over the next month in consultation with the property industry, but are understood to be likely to follow the usual bank commercial property lending criteria.
