A Marriage of Convenience: Citibank, Hawke-Keating Labor and Foreign Bank Entry into Australia

Abstract

This study explores the long- and short-term backdrop to the Hawke-Keating government’s decision in 1984-85 to include the US banking giant, Citibank, in the select group of 16 foreign banks granted an Australian banking licence. Such a development ran counter to decades of mutual distrust between the Australian labour movement, large foreign banks in general, and US multinational firms in particular. It was also by no means inevitable. Citibank’s success is attributable neither to structural imperatives per se nor to superior strategic acumen. Rather, it derived from a shifting long-term interplay between structural factors, strategic and ideological intent and chance events. In particular, we highlight Citibank’s emergence as a significant player in non-bank financial services activity in Australian during the 1960s and ‘70s, an emergence that reflected persistent lobbying, well-timed market intervention, and serendipity. Equally, we argue that Federal Labor’s ultimate embrace of selected foreign banks, and of Citibank in particular, is best understood as a marriage of convenience. We also present evidence to show that the outbreak of amity between Labor and Citibank was by no means assured and that the immediate backdrop involved a complex process of positioning, probing, stand-off and trade-off between Labor neo-liberals, Reserve Bank and Treasury officials and Citibank executives.