Why have we changed our name?
Why are we doing this now?
Why can’t you get the cheaper funds as a Credit Union?
Why did we choose the name Teachers Mutual Bank Limited?
What is the difference between a credit union, a mutual bank and a bank?
What are the benefits of the change for members?
What will change?
What will remain the same?
If you looking to grow, why aren’t you expanding the bond instead of becoming a mutual bank?
Will this affect fees?
Does this mean we will be demutualising?
What was the process of changing our name to become a mutual bank?
Are there other mutual banks?
We’ll have the opportunity to lower our cost of funds
Continuing to offer competitive interest rates and fees to our members is a priority for us.
Part of our interest rate management is being able to source diverse and cost-effective funding. As a mutual bank, we aim to do this in two new ways:
- We use member, wholesale and customer deposits to fund member loans and support business operations and technology investment. Changing our name will help us attract wholesale deposits from companies whose investment rules prevent them from investing with a credit union.
- We also intend to compete for more favourable credit spreads in the wholesale market based on our new bank status. Therefore, dependant on market conditions, we anticipate being able to access more cost-effective funding in the wholesale market.
Communicate clearly what we do and what we offer
We are focused on supporting the teaching community within Australia – we always have been and we always will be. But, we can only do this if they know about us and use our products and services. What we have found is that many people don’t know what a credit union is or that we offer more than just savings accounts and personal loans. This may be hard for our current members to understand as the benefits and extensive products and services offered are probably quite obvious to you.
Industry research and our experience, however, have shown that many consumers believe that credit unions are ‘old fashioned’ and only offer limited products and services. In fact only 18% of people would consider switching to a credit union, whilst 57%1 would consider switching to a bank.
We believe that our name change will help us meet these challenges whilst retaining our mutual status and upholding the values and principles upon which we were founded.
1 Sweeney Research report May 2011 – Credit Union and Building Society campaign tracking research
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Late 2010 the Government announced that they would put more competitive pressure on the ‘big banks’ by building a new pillar in the banking system based on the combined competitive power of mutual credit unions and building societies.
This reform created awareness and a positive environment for us to pursue an opportunity to become a mutual bank. With a history of providing better options and the best service possible to our members combined with our strong financial position, we believed that the timing was right because:
- The Federal Government was supporting and investing in the promotion of mutual financial institutions as strong and viable banking alternatives to the ‘big banks’ for Australian consumers.
- We met the eligibility criteria to apply for regulatory approval to use the restricted term ‘bank’.
The Board believes that this is a proactive and prudent strategic initiative that will improve our competitive positioning and support our long-term growth and cost management plans.
We were unable to attract wholesale deposits from some entities (for example, some councils, superannuation funds and not-for-profit organisations) because we are not designated or named a ‘bank’ and their investment charters preclude them from investing with a credit union.
Financial institutions with similar credit ratings to our own can be afforded more favourable interest rates if they are a bank due to the market perception that a bank is of a higher standing and more secure.
Continuing to offer competitive interest rates and fees to our members is a priority for us.
We believe the name reflects who we are and what we do.
The word ‘Teachers’ communicates that we serve an industry. We have a strong history serving the education community and we will continue to serve this community.
The word ‘Mutual’ clearly differentiates us within the banking sector and communicates that we are a member-based institution owned by and run for the benefit of members.
The word ‘Bank’ promotes to existing and future members the fact that we offer more than just savings accounts and personal loans. We offer the full range of financial products and services that individuals and families need. In the public’s mind it infers strength and stability.
Our registered company name is Teachers Mutual Bank Limited and our trading name is Teachers Mutual Bank.
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Credit union's service communities and/or industry employees and are owned by members. One member share equals one vote on credit union constitutional matters. Not all credit unions provide credit cards, home loans, online savings accounts, foreign exchange etc to individuals and their families. Many credit unions still offer limited banking services. Credit union profits are reinvested to support competitive products and services and community program investment.
Mutual banks service communities and/or industry employees and are owned by members. One member share equals one vote on mutual bank constitutional matters. Mutual banks provide the standard consumer banking services such as credit cards, personal loans, home loans, online savings accounts, internet and mobile banking etc. Profits are reinvested back into the mutual bank to support competitive products and services and community program investment.
Banks are owned by shareholders who may or may not be customers. Most banks are publicly listed on the stock exchange where individual or institutional investors purchase multiple shares with varying voting numbers and rights attached to the shares. A proportion of bank profits are returned to shareholders as dividends. Banks strive to maintain or increase the value of the bank’s share price and return a strong dividend to shareholders.
Credit unions, mutual banks and banks are Australian Authorised Deposit-Taking Institutions and are regulated by the Australian Prudential Regulation Authority (APRA).
Providing superior products and services to our members has always been one of our key priorities. By becoming a mutual bank we will strengthen our competitiveness in the financial services market which will present us with more options to reduce our costs. This will give us a platform from which to improve and expand our range of products and services. Specifically, benefits would include:
- improved mobile and internet banking solutions
- expanded home loan packages
- better pricing for insurance products
- increased access to financial planning services
- a rewards scheme credit card
- competitive owner-occupied and investor home loans, and
- competitive and innovative deposit products.
As a mutual bank we will remain focused on supporting the education community within Australia through our many programs and initiatives. We will continue to reinvest our profits back into our systems, people and products in order to provide you with an even better banking experience.
- Our name will change – we are now Teachers Mutual Bank Limited.
- Our constitution will be updated to reflect the new name.
- As a mutual bank, we will have access to alternate sources of funds.
- Our web address is now tmbank.com.au
We are committed to continuing to provide exceptional service to the Australian education community. Our values and our principles are at the core of everything we do – now and in the future. As a mutual bank we will remain committed to members and we will continue to:
- focus on the Australian education community
- provide superior service and a member focus
- be owned by members where every member has one equal vote
- operate as a mutual – we have always been a mutual, member owned and member focused, and this will not change
- reinvest profits back into better products and services, lower borrowing rates and higher investment returns so that profits come back to you
- focus on personal banking and not business or commercial banking
- offer value-added services through a network of partners
- invest in the development of online and mobile banking options so members can easily bank wherever they are
- offer access to accounts through a growing network of rediATMs
- uphold our core values of education, partnership, strength, integrity, sustainability, community and member focus
- respect, appreciate and revere our rich and unique history in the education community, supporting teachers and their families.
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We believe that changing our name to Teachers Mutual Bank will improve our overall competitive positioning in terms of both growth and our expectation of achieving cost effective funding, while a change in bond would only enable growth.
This is a long-term strategy that aligns us with the ever changing and increasingly competitive financial services landscape.
No. In setting fees and charges the Board will continue to concentrate on providing member value. They are conscious that fees and charges must remain fair to members to maintain owner equity and be easy to understand. They also endeavour to ensure our fee income remains below the industry average.
We will remain member-owned and member focused and this will not change. We have always been a mutual and will continue to exist for the benefit of our members, teachers, their families and their community.
To become a mutual bank there were two key steps:
Members vote
Members needed to vote in favour of the change either by proxy up until 10am on 24th November 2011 or in person at our AGM on 26th November 2011. 80% of members who voted, voted in favour of the name change. This was over the 75% requirement.
APRA approval
We met the minimum capital requirements set by APRA (the Australian Prudential Regulation Authority) as we had over $260M in Tier 1 capital, well above the $50M minimum. To be able to use the term ‘bank’ in our name, we had to apply to APRA for consent under Section 66 of the Australian Banking Act 1959. This was finalised after the resolution to change our name had been approved by members.
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Yes, two other teacher based credit unions became banks. On 1st September 2011, mecu became bankmecu and on 1st October 2011, Queensland Teachers Credit Union became QT Mutual Bank Limited.
A number of credit unions are in the application process to apply for bank status.