ME to tap super funds
The Age
Saturday March 27, 2010
ME BANK hopes to use its links with its industry super fund owners to tap their more than 5 million members as a market to sell home loans, deposits and credit cards.The new chief executive of ME Bank, Jamie McPhee, said the mid-size lender had emerged from the financial crisis intact and, with signs of strength returning to funding markets, it was poised to increase competitive pressure in the nation's landscape.Part of this will be to align ME Bank more closely with the industry super funds, capitalising on their low-cost model in the hope of attracting some of their huge membership base.Mr McPhee said customers were being turned off by the actions of some of the bigger banks. Westpac came under fire this week when it signalled it was about to start charging interest on interest across its credit cards, although this merely brought it into line with key rivals."Consumers are looking for a genuine alternative €” and I don't mean a fifth major," Mr McPhee said yesterday. "The market is looking for competition."The 44-year-old previously headed Adelaide Bank, but moved across to Bendigo Bank as an executive director when the Victorian regional lender acquired the South Australian-based bank three years ago. Mr McPhee was one of the frontrunners to take charge of Bendigo Bank, although the role eventually went to veteran Bendigo banker Mike Hirst.ME Bank is owned by 35 industry super funds, although it is controlled by HESTA Super Fund, HostPlus, CBUS and Australian Super, which are its four largest shareholders.ME Bank is heading for a record profit this year, marking a rapid turnaround from just two years ago when frozen securitisation markets meant ME struggled to expand its loan book.Mr McPhee said the cost of funds had started to ease, while demand for home loans continued to be strong and bad debts had fallen away quicker than expected.In November, ME Bank was one of the first to test the market appetite for securitisations, pricing a $780 million mortgage-backed securitisation. It has followed with another issue and has raised funds for its lending book using the government's guarantee. Mr McPhee said he would focus on increasing ME Bank's deposits to help broaden its funding base.He said it was too early to say whether the government should wind back its support of the securitisation market through its Australian Office of Financial Management investments program."Competition is very important, but I think the Australian financial system is in really good shape," he said.
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