Swan on song over mutuals
Mutual banks are getting an unusual share of publicity, all of it free, from the recent shifts in the banking debate.
Over recent days, Wayne Swan, Australia's Treasurer has become spokesperson-in-chief for the mutuals, pushing their merit as an option for those seriously cheesed off with their bank.
Swan told Radio 2UE, in Sydney, that "the point I made yesterday is that we need a new pillar in the banking system based on the competitive power of our mutual sector - our building societies and our credit unions - because, you see, the big banks are behaving badly because they believe that their customers simply won't walk down the road to get a better deal.
"So, I'd urge consumers and customers out there to have a look around, because if you look at the credit unions and building societies you can get a better deal, up to one full percentage point, when it comes to your home mortgage."
Swan took the trouble to promote Abacus, the industry association that represents credit unions and building societies, by mentioning its website address.
Endorsing Abacus members, Swan said: "They [people] will see some good value that's out there and that's the message we need to send to the banks, and that is why we need a range of reforms to make our banking sector more competitive.
"There's no one single measure here that's a magic bullet, but there's a range of reforms that we need."
A treasurer spruiking for a financial entity is not that unusual. Peter Costello, as treasurer in various Coalition governments, especially in the late 1990s, often mentioned mortgage managers by name - usually Aussie Home Loans.
The endorsement by the Treasurer follows some rare television advertising by the mutual sector, which coordinated both the will and the funds for the sector's first national advertising campaign in years.
The mutuals need a lot more help than just marketing, however.
Swan is in talks with them, as he is with other entities in the sector, but in the case of mutuals he must be listening pretty keenly to what they have to say.
The specific mechanisms the mutuals and Treasury are talking over are not clear.
They may centre on interventions or assistance to deliver wholesale funding at a lower cost than now.
While many mutuals followed the RBA pricing lead and lifted home loan rates by 25 basis points, some lenders, including some key mutuals, are still making up their minds three weeks later.
Home loan rate rises of 35 basis points will flow through parts of the credit union sector as their managements respond to the escalating interest rates paid on deposits.
Recent yield increases on key products are in the order of 100 bps, as mutuals strive to stem any possible flight to the high-priced deposits offered by the big banks.