10/09/2009 - 00:00

Suncorp targets WA opportunities

10/09/2009 - 00:00


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SUNCORP representatives realise their bank isn't well known outside its home state of Queensland.

SUNCORP representatives realise their bank isn't well known outside its home state of Queensland.

Suncorp head of super and investments, Vicki Doyle, told WA Business News people outside of Queensland sometimes thought Suncorp was a sugar refinery, or something of that order.

So to clear things up, earlier this year Suncorp rebranded its banking arm to Suncorp Bank.

The regional bank will be hoping the message is becoming clearer in Western Australia after taking its Perth branch numbers from two to eight in the past 12 months.

Ms Doyle said WA was 'underbanked' and there was room for another player, following Commonwealth Bank's purchase of BankWest.

"We are looking to be the alternate to the majors," she said.

Suncorp is not alone in its view that the local market is far from saturated.

In a submission to a senate inquiry into banking mergers, the industry body for the mutual banking sector, Abacus, noted that Commonwealth Bank's takeover of BankWest gave the merged entity 46 per cent of deposits in WA. Further, the combined group has 38 per cent of the state's ATMs.

Lenders with big deposit bases and high credit ratings like Commonwealth Bank are also taking market share in the mortgage sector, by pricing smaller lenders out of the market.

In a separate submission, competition expert Frank Zumbo of the University of NSW called upon the competition watchdog to force Commonwealth Bank to sell BankWest, citing increasing market dominance by big banks to the detriment of customers.

The deal was cleared after regulators found that, due to the financial situation of BankWest's UK parent HBOS, BankWest would not be able to offer future competitive pricing.

Ms Doyle, who was in Perth drumming up business for the superannuation side of the business, said Suncorp aimed to boost its $8 billion super and investment division at branches and by attracting employers into placing their corporate super with the bank.

"We want to be the direct simple super offer for all Australians," the former Suncorp head of strategy said.

"We are not an ING. I don't have tens of millions of dollars to build that brand. We've got a lot of work to do outside Queensland."

Suncorp's banking division was almost bought by a major bank during the financial crisis, with ANZ coming close to securing the deal. The move by the federal government to introduce funding and deposit guarantees eased pressures on the regional provider, and the deal was scuppered.

In its own submission to the senate inquiry into banking mergers, Suncorp said there was a threat that limited access to funding would restrict the ability of regional and non-banks to create necessary competitive tension.

"There are plenty of participants in the market right now but at question is their ability to offer a sustainable competitive proposition," Suncorp group executive David Foster wrote in a submission.

"It's imperative that eventual removal of the guarantee is based on a view that takes into account all Australian deposit taking institutions. It is important that no steps to remove the guarantee are made until the markets allow efficient issuance for all ADIs that utilise term funding."

Consolidation in the financial services sector in recent years has substantially altered the local market.

Bank of Queensland's purchase of Home Building Society has left Police & Nurses Credit Society as the last Perth-based credit union in the local market.

Teachers Credit Union recently established a Perth office in the belief WA offered great potential.

Last month, National Australia Bank announced it would buy Challenger's Financial Services Group's mortgage management business, which included the Plan, Choice and Fast mortgage aggregator businesses, in one of several transactions that has given the big banks more control over the sector.


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