Last week’s takeover of United Credit Union continues a long run of Western Australian financial institutions falling prey to interstate and overseas predators; but surprisingly, this trend has done little to dampen competition.
Last week’s takeover of United Credit Union continues a long run of Western Australian financial institutions falling prey to interstate and overseas predators; but surprisingly, this trend has done little to dampen competition.
Many of the takeover targets have continued to trade, usually under a new name.
More significantly, for every financial institution taken over, others have entered the WA market either directly by establishing local branches or indirectly by using finance and mortgage brokers.
Bendigo Bank, Bank of Queensland, St George Bank, Wizard Home Loans, and Aussie are some of the new or expanding lenders in the WA market.
United has announced plans to merge with Adelaide-based credit union Community CPS Australia, creating an institution with 175,000 members in four states and territories and managing total assets of $2.2 billion.
Like nearly every merger in financial services, the United deal was driven by a belief that bigger institutions can be better.
“We believe that, as a community focused mutual organisation, we can offer our members a financial service relationship which is significantly different from what they will experience as customers of banks,” United chief executive Stephanie Black said.
“The merger will strengthen our ability to deliver a differentiated service.”
The deal leaves the Fred Huis-led Police & Nurses Credit Society as the last Perth-based credit union in the WA market.
It followed Bank of Queensland’s acquisition of Home Building Society in 2007, which in turn followed Home’s purchase of StateWest Credit Society in 2006.
Bank of Queensland had previously entered the WA market in its own right through a handful of owner-operator bank branches, a far cry from the traditional bank-owned model.
Looking further back, other plays in the WA market include the move by UK-based HBOS to full ownership of BankWest, Sydney-based Westpac Banking Corporation’s purchase of Challenge Bank, and Melbourne-based ANZ Banking Group’s absorption of Town & Country Bank.
These transactions were driven by a strategy of pursuing growth by acquisition.
In contrast, many other banks and non-bank lenders have pursued organic growth in WA over recent years.
If the number of branches is used a guide, the most successful growth strategy has been pursued by the Community banks, which involves local communities forming joint ventures with Bendigo Bank.
Thirty Community Bank branches have been established in WA and in addition Bendigo operates in WA in its own right.
St George Bank has pursued a more traditional strategy, opening five new branches across Perth last year.
St George has been targeting both retail and commercial customers.
In the non-bank sector, Wizard Home Loans has opened 16 branches in WA and Aussie has established three branches.
In addition to financial institutions with a branch presence in WA, many other financiers are lending in WA through brokers such as Mortgage Choice and The Mortgage Gallery.
In the process, several lenders who relied on wholesale funding have withdrawn from this segment.
Macquarie Bank, Maxis Home Loans and the ANZ Bank’s Origin home loans arm are some of the non-bank lenders to have pulled out of the WA market or wound down their operations because of tighter credit conditions.
