19 December 2014
The Australian Financial Review has recognised the challenges faced by customer-owned banks in a competitive market.
In the wake of the Murray Report, the AFR has noted that that almost all of the reserves held by the 100 credit unions, building societies and mutual banks are retained earnings, which is one of the safest capital classes. This is double the average for the major and regional banks. However, rating agencies have said that this will simply put the mutual banks on an even footing with their larger counterparts, should all banks be required to carry more capital.
Recently appointed CEO of the Customer Owned Banking Association, Mark Degotardi, has noted that many Mutual banks are working on a plan to reduce their high cost-to-income ratios by merging back-end processes. It is hoped that this will be the first of many steps to even the playing field in the banking sector.
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