A LIST held by Federal Treasurer Peter Costello is all that separates non-bank financial institutions from banks.
A LIST held by Federal Treasurer Peter Costello is all that separates non-bank financial institutions from banks.
Those on the list get to be banks. Those not on the list do not.
Since the adoption of several proposals resulting from Stan Wallis’ enquiry into the banking industry, the prudential requirements of the two types of financial institutions are the same.
Formerly, banks answered to the Reserve Bank of Australia.
These days, both banks and NBFIs answer to the Australian Prudential Regulation Authority.
Home Building Society general manager Jim Freemantle said NBFIs offered the same services as banks.
“Except for credit unions, where the ownership situation differs, banks and non-banks are the same thing,” Mr Freemantle said.
In the case of credit unions and credit societies, ownership is held by the ‘members’ of the union or society. With banks, ownership is usually held by shareholders.
As StateWest Credit Society CEO Greg Wall puts it, credit societies only have to focus on their members.
“Banks have three stakeholders – their shareholders, their customers and their staff,” Mr Wall said.
“We have two – our members and our staff.
“We can structure our business to have a higher level of service.
“We can empower our staff to show some warmth and friendliness – humanise ourselves a little more.”
Mr Wall said the fact non-banks did not have to satisfy shareholders was reflected in the price of products and services.
“We can be more competitive with fees and charges than banks. We tend to reflect what the costs actually are rather than chasing a profit,” he said.
“StateWest always had the intention to be the best in value to its members.”
These days NBFIs can even compete with banks in terms of reserves.
Health Services Credit Union general manager Brian McNamara said NBFIs often had higher levels of reserves than banks.
“We currently have 14 per cent reserves as a measure of our capital adequacy,” Mr McNamara said.
“Some have as high as 20 per cent, which is more than double the amount required.
“The Australian Prudential Regula-tion Association has laid down a requirement of 8 per cent reserves.
“Nationally, the average for NBFIs is 12 per cent to 13 per cent,” he said.
Those on the list get to be banks. Those not on the list do not.
Since the adoption of several proposals resulting from Stan Wallis’ enquiry into the banking industry, the prudential requirements of the two types of financial institutions are the same.
Formerly, banks answered to the Reserve Bank of Australia.
These days, both banks and NBFIs answer to the Australian Prudential Regulation Authority.
Home Building Society general manager Jim Freemantle said NBFIs offered the same services as banks.
“Except for credit unions, where the ownership situation differs, banks and non-banks are the same thing,” Mr Freemantle said.
In the case of credit unions and credit societies, ownership is held by the ‘members’ of the union or society. With banks, ownership is usually held by shareholders.
As StateWest Credit Society CEO Greg Wall puts it, credit societies only have to focus on their members.
“Banks have three stakeholders – their shareholders, their customers and their staff,” Mr Wall said.
“We have two – our members and our staff.
“We can structure our business to have a higher level of service.
“We can empower our staff to show some warmth and friendliness – humanise ourselves a little more.”
Mr Wall said the fact non-banks did not have to satisfy shareholders was reflected in the price of products and services.
“We can be more competitive with fees and charges than banks. We tend to reflect what the costs actually are rather than chasing a profit,” he said.
“StateWest always had the intention to be the best in value to its members.”
These days NBFIs can even compete with banks in terms of reserves.
Health Services Credit Union general manager Brian McNamara said NBFIs often had higher levels of reserves than banks.
“We currently have 14 per cent reserves as a measure of our capital adequacy,” Mr McNamara said.
“Some have as high as 20 per cent, which is more than double the amount required.
“The Australian Prudential Regula-tion Association has laid down a requirement of 8 per cent reserves.
“Nationally, the average for NBFIs is 12 per cent to 13 per cent,” he said.
