Transfer of business complete on new Alliance

A new banking model created by Bendigo and Adelaide Bank and an alliance of Australian credit unions has celebrated a significant milestone, with the transfer of business between the parties now complete.

The Alliance model was developed by the Bank and four credit unions (AWA, BDCU, Circle and Service One). Yesterday, the balance sheet transfer of the Alliance partners’ more than $540 million in loans, and $620 million in deposits took place. The alliance partners also relinquished their ADIs, and as of 1 March 2015 operate as agents of the Bank under its banking licence.

The Bank’s Managing Director Mike Hirst, and Service One CEO and Alliance spokesman Peter Carlin, said the Alliance model was an exciting advancement that will enable the Alliance partners to grow their business while remaining independent.

"This new model received overwhelming support from our members as it will enhance our ability to offer greater competitive choice and provide our members with access to a wider range of products and services," Mr Carlin said.

"This not only benefits the people we serve, but also positions us well for growth in the changing financial market.

"Many businesses are trying to meet the demands of increasing regulation and new technologies. By aligning with the Bank we can free ourselves from prudential capital and funding challenges, minimise our regulatory requirements and costs, and successfully overcome these disruptors," he said.

Mr Hirst said the Alliance is a logical solution for all parties, and affords the Bank with an opportunity to grow its business in a manner that is totally aligned to its strategy.

"We pursued this initiative as it underpins our positioning as a partner of choice, and plays to our strengths," said Mr Hirst.

"It also enables us to leverage our considerable expertise and investment in the Community Bank® model, third party lending and community engagement.

"Our Bank has a long and proud history of working with organisations and communities to find solutions to the challenges they face, and this Alliance is another example of that," he said.

About the Alliance model

• The loans and deposits of the participating credit unions have been transferred to Bendigo and Adelaide Bank, while reserves remain 100 per cent member-owned.
• Staff remain employees of the mutual company that operates the franchise and Alliance members continue to be serviced by their local branch staff.
• In time, members will have access to new products and technology from Bendigo, with the Alliance partners retaining pricing and loan approval discretions.
• Bendigo is the approved deposit-taking institution and assumes responsibility for compliance, systems and balance sheet management, with this delivering improved economies and cost savings.
• Participating partners no longer refer to themselves as credit unions, instead adopting new branding.

About the Alliance partners

AWA Alliance Bank: AWA was established in 1969 and has approximately 4,608 members and balance sheet assets (as at 30 June 2014) of $132 million. AWA also manages $131 million in securitised loans on behalf of Perpetual Trustee Company Limited as well as $8 million in loans that have been sold to Adelaide Bank.

BDCU Alliance Bank: BDCU was established in 1963 and provides a range of financial services to approximately 12,000 members across the Southern Highlands and Tablelands of NSW. As at 30 June 2014 BDCU had assets of $181 million.

Circle Alliance Bank: The origin of Circle Credit Co-operative Ltd can be traced back to 1963. Circle has approximately 3,300 Members and as at 30 June 2014 its asset size was $63.6 million.

Service One Alliance Bank: Service One Credit Union was registered as a company on 14 February 2001 and granted an ADI licence on 1 May 2001, and was formed following the amalgamation of three credit unions, namely, The Credit Union of Canberra, Snowy Mountain Credit Union, and Hospitals Credit Union. Service One subsequently merged with Bemboka Community Credit Union in 2004. Service One has approximately 19,300 members and balance sheet assets (as at 30 June 2014) of $297 million. It also manages $6.9 million in securitised loans on behalf of Perpetual Trustee Company Limited.