Conditional capital for ME Bank

Ian Rogers
ME Bank has two main hurdles to meet if it wants to suck in more capital from the superannuation funds that own it.

Jamie McPhee, chief executive of ME Bank, and Bernie Fraser, the bank chair, outlined a few themes informing the bank's activities at a briefing for banking writers in Melbourne on Friday.

The media prop for the briefing was the long version of a new television advertising campaign that debuted for ME Bank last night. Made in the style of the industry super funds ads that have run for some years, the ads aim to help steer the bank toward meeting one of the two goals of its investors.

The first of these is to improve the cross sell of bank accounts and loans to super fund members.

Unprompted recognition of ME Bank by industry fund members is around five per cent and prompted recognition is around 30 per cent, so there's room for improvement.

The second task for the bank is to satisfy an undefined investment threshold, which in the short term is very doable.

With interest margins up, profits are also up, relative to both the subdued earnings of 2009 and a conservative 2010 budget. The annual valuation exercise for the forthcoming accounts will reflect this fact, and the two years of write-downs in the super funds' books of ME Bank are about to reverse.

Super funds kicked in a further $100 million in capital to ME Bank over the last 12 months, Fraser said.

These goals and the new marketing campaign were all in progress prior to the arrival of McPhee at ME Bank in early February.

McPhee will play a larger hand in refreshing the bank's distribution strategy, a topic for the next board meeting.