One of Australia's largest credit unions, mecu, will change its trading name to bankmecu, making it the second credit union to take advantage the Government's policy of allowing mutuals regulated by the Australian Prudential Regulation Authority to use the term "bank" in their names.The group will start operating under the bankmecu name on September 1. Queensland Teachers Credit Union, which announced last week that it had APRA approval to change its name to QT Mutual Bank, will start using its new name on October 1.Mecu's chief executive, Phylip Doughty, said the prudential standards under which the group operates would remain the same. Mecu has 125,000 customers, 28 service centres, 350 staff, A$2.6 billion in assets and $287 million in capital.One operational change is that mecu will have to develop a closer relationship with the Reserve Bank. It is setting up an exchange settlement account and will establish repurchase arrangements. This will give it a more stable liquidity and funding profile.The head of public affairs at the credit union and building society peak body Abacus, Mark Degotardi, said he did not know whether the same requirement would apply to all mutuals adopting the "bank" designation."APRA has not issued anything on what the hurdles will be in its approval process," Degotardi said."The banking regulator has wide-ranging powers and will probably adopt a horses-for-courses approach."Abacus, the peak body for the mutual financial services industry, has been pushing for its members to have the right to use the term "bank" for some time.Its view is that all licensed ADIs (authorised deposit-taking institutions) operate under much the same regulatory regime, and credit unions and building societies should be able to use the term that most people in the community associate with safe, well-regulated financial institutions.The idea was adopted by the Government in its December policy statement: Competitive and Sustainable Banking System. One of the aims of the policy was to introduce changes that would "educate consumers about the safety and competitiveness of mutual lenders". Under Section 66 of the Banking Act, APRA has the power to provide consent to businesses proposing to use the terms "bank, banker, banking, merchant bank, offshore banking unit, credit union and building society". APRA's authorisation guidelines for authorised deposit-taking institutions say that the granting of an authority to carry on a banking business gives the successful applicant the right to use the expressions "authorised deposit-taking institution" or "ADI" in relation to its business. The authority does not automatically entitle the ADI to call itself a bank.APRA's guidelines say that applicants proposing to operate as banks must have a minimum of A$50 million of Tier 1 capital.Doughty said mecu did not have to go to members for approval of the change because it is changing its trading name but not its business name, which is mecu Ltd. This will make the changeover relatively inexpensive. The group will have to change its branding and signage but contracts and other business documents will not be affected.Doughty said the group undertook extensive member research and