The industry fund-owned Members Equity Bank has a bold plan to regain the ground it lost to the big four banks during the post-GFC malaise in securitisation markets.
Members Equity Bank (ME Bank) last week packaged together its home loan, offset transaction account and MasterCard offerings together for the first time, in a bid to regain market share in the $200,000-$600,000 loan size space. The variable rate is 7.09 per cent for all loan sizes, while the three-year fixed rate is 7.25 per cent, which ME claims is the second-cheapest in the entire market.
Eight months in as group executive of brand, products & distribution at ME Bank, Ian Hendey said the bank had been buoyed by this month’s raising of $1 billion in the residential mortgage-backed securities market, at 100 bps above the swap rate and without recourse to the Australian Office of Financial Management.
He said that fundraising, which was oversubscribed by $400 million, showed that the gulf in the cost of capital between ME Bank and the Big Four was closing. Hendey said the bank’s long-term goal is to have a funding mix that is 50 per cent wholesale – the bonds held by its industry fund owners and partners – and 50 per cent on-balance sheet through RMBS and deposits. ME’s retail deposit base rose 34 per cent in 2010, and its business deposit base by 12 per cent, albeit off a low base in comparison with the four majors.
The bank is hoping deposits will be further bolstered by the May launch of an ‘everyday’ transaction account, as well as a renewed publicity blitz around its agreement with Westpac which allows ME Bank customers to use all Westpac and St. George automatic teller machines without incurring a service fee.
“I think we were on [the major banks’] radar 10 years ago, but then during the GFC we slipped off, and we’ve stayed off because they’ve been focussed on their own strategies” Hendey said.
“So I think there’s a bit of a sleeper impact for us, and I think with this new package and then the transaction account in May, we’ll be back under their noses pretty quickly.”