A government-controlled
savings bank had been founded on 1 January 1842 as the
Savings Bank of Port Philip. Other independent savings banks merged over time and this development was recognised by legislation in 1912, which reconstituted the bank as the
State Savings Bank of Victoria. In 1980 its name was changed to the State Bank of Victoria, the name it had until its sale to the
Commonwealth Bank in 1990 and subsequent dissolution. 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. Another contributor to the State Bank’s decline was its acquisition of the already troubled
Australian Bank in January 1989. Tricontinental eventually collapsed with losses of A$1.5 billion, The overall sale price was A$2.0 billion. 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. ==See also==