Defcredit becomes Defence Bank

The move by credit unions and building societies to become mutual banks is gathering momentum. Defence Force Credit Union announced yesterday that it had Australian Prudential Regulation Authority approval to change its name to Defence Bank.

Defcredit's move follows similar moves by bankmecu, QT Mutual Bank and Heritage Bank. Teachers Credit Union is going through the APRA approval process and expects to become Teachers Mutual Bank in April.

Defcredit will operate as Defence Bank from today. It is Australia's tenth largest credit union with assets of about A$1.3 billion.

Defence Bank chief executive Jon Linehan said the credit union had not been required to make any changes to its financial structure to gain APRA approval.

However, the credit union was already in the process of making a couple of changes on the funding side. It will enter into a repurchase agreement with the Reserve Bank of Australia and is seeking a credit rating with Standard & Poor's.

Linehan said he had spoken to the heads of other mutuals about the success of their name changes. "It is a bit early to get any hard evidence but the ones we spoke to are happy with the change."

Linehan said he expected industry consolidation would result in the formation of 10 to 12 large mutual banks. These would form the banking industry's "fifth pillar".