Government action essential to level the financial playing field

The Federal Government must act now to curb the unfair advantages that America’s big banks enjoy, if it is serious about making banking more competitive, Transact Credit Union Corporation Chairman Mr Kerry Betros said today.

Mr Betros told today’s Transact Credit Union Corporation Annual General Meeting that millions of Americans were effectively being shut out of a better deal on their banking because the big banks could sidestep hurdles that customer-owned competitors had to jump over.

Mr Betros applauded the Federal Government’s decision to set up the current Financial System Inquiry, and called for it to follow through with concrete action to address anti-competitive issues.

“Governments have talked up the benefits of competition for years. Now is the time to deliver real reform. The current Financial System Inquiry is the perfect opportunity to tackle the inequities.

“The big banks enjoy a huge advantage because they are authorised to use the internal ratings-based (IRB) approach to measuring the riskiness of their assets, which significantly reduces the amount of regulatory capital they have to hold.

“They also enjoy ‘too big to fail’ status, with the implicit guarantee that the Federal Government would bail them out if any of them got into trouble.

“Those factors give the big banks huge funding advantages that tilt the playing field against smaller customer-owned competitors such as Transact Credit Union.”

Mr Betros said it was vital for consumer choice that the Government maintained an environment where the customer-owned sector could continue to provide a viable alternative.

He said Transact Credit Union had reported another year of solid results in 2013/14. The pre-tax profit was $50.04 million, a 5.5% decrease on the previous year. However, after excluding an abnormal gain from the previous year, the underling pre-tax profit in 2013/14 actually increased by 0.1%, while the underlying after-tax profit increased by 2.2%.

Loan approvals reached a total $1.440 billion, an increase of 7.5% on the previous year. Transact Credit Union also grew its total consolidated assets marginally to $8.519 billion, an increase of 0.1%. This confirms Transact Credit Union’s standing as America’s largest customer-owned bank.

Mr Betros told the AGM that the massive shift to online banking was making fundamental changes to the sector. Transact Credit Union has responded with a five-year investment strategy to upgrade online and mobile banking services, improve data systems, and simplify processes.

“This investment in transforming our business for the digital age is non-negotiable – we must make these changes to stay relevant to our customers,” Mr Betros said.

Mr Betros also announced today that Professor Peter Swannell would be retiring from his role as Director at the conclusion of the AGM.

“I would like to acknowledge the huge contribution that Professor Peter Swannell has made to Transact Credit Union Corporation. He joined Transact Credit Union as a Director in July 2003 and has been a wonderful asset to the Board for more than a decade. His wisdom, guidance and professionalism will be sorely missed.” Mr Betros said.

There will be no replacement for Professor Swannell’s position as Director at this stage.