Teachers Credit Union has joined the move by mutuals to add "bank" to their brands. Australia’s third largest credit union will ask members to vote at a meeting scheduled for November 26 on a proposal to change its name to Teachers Mutual Bank.
Teachers Credit Union’s chief executive, Steve James, said that if members vote in favour, and the Australian Prudential Regulation Authority ticks all the boxes, the name change would take effect next April.
The group issued its 2010/11 annual report yesterday, reporting strong growth in loans and deposits, and an 18 per cent increase in net profit.
APRA’s main requirement for the use of the term “mutual bank” is that the institution has minimum capital of $50 million.
Teachers Credit Union follows Queensland Teachers Credit Union, mecu and Heritage Building Society in applying for a name change.
Abacus, the peak body for the mutual financial services industry, has been pushing for its members to have the right to use the term "bank" for some time.
Its view is that all licensed approved deposit-taking institutions operate under much the same regulatory regime, and credit unions and building societies should be able to use the term most people in the community associate with safe, well-regulated financial institutions.
The idea was taken up by the Government in its December policy document, Competitive and Sustainable Banking System. One of the aims of the policy is to introduce changes that will "educate consumers about the safety and competitiveness of mutual lenders."
Not all mutuals believe that such a change would be to their advantage. Credit Union Australia's chief executive, Chris Whitehead, said last month that CUA had no plans to attach the word "bank" to its name.
"We have a clear differentiation around being an alternative to the banks and we will continue with that approach," Whitehead said.
James said one of the benefits of the change would be to widen its deposit base. "There are a number of superannuation funds and local councils whose charters require them to deposit with a bank. If we could get access to those low cost funds it would improve our margin."
Teachers Credit Union made a net profit of A$29.1 million in the year to June – 18 per cent up on the previous year. It increased reserves 11 per cent to $290 million and maintained a capital adequacy ratio of 15.6 per cent.
Retail deposits were up 10.7 per cent to $3.1 billion and loan balances were up 12.5 per cent to $2.7 billion.