State Bank of Victoria

The State Bank collapsed due to the weight of the grossly irresponsible lending made in the 1980s, in particular by its merchant bank subsidiary Tricontinental, after the Reserve Bank of Australia decision to increase interest rates in 1989 brought about the deep recession that put pressure on those financial institutions that were heavily exposed to the property market.

[3] Tricontinental eventually collapsed with losses of A$1.5 billion,[1] which threatened the existence of the State Bank and led to its sale to the Commonwealth Bank.

[1] The collapse of the State Bank was a key factor in the defeat of the State Labor government led by Joan Kirner and the election of the Liberal Party led by Jeff Kennett, at the 1992 Victorian state election.

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