A group of 19 regional and rural mutual banks are ramping up a campaign for major banks to made subject to a levy that would be funnelled to smaller banks to subsidise the cost of their atypically large branch networks.
Over the weekend this group said they were “calling for a better deal to meet the increasing costs of keeping their branches open for people who need access to services, such as cash handling and expert financial advice, as well as help in handling scams and fraud.”
The collective argues that regional bank branches, which can cost around $1.2 million a year each to run (compared with around $1.5 million for a major bank), are a vital community service which is currently provided with no support from big banks who profit most from the financial system in Australia. They have written to major political parties and independents seeking their support for such a levy on big banks. in the lead up to the election.
“Our bank branches provide a range of secure services and professional advice that cannot be replaced by online services, post offices or ATMs,” David Heine, CEO of Regional Australia Bank that runs 38 branches in regional NSW said.
The collective says that in many country towns, small regional banks end up acting as a de facto branch for the big banks which have abandoned the bush.
“In a process known as ‘pass-through banking’, customers use regional bank branches for costly services like cash handling and then transfer their funds to big banks who enjoy the profits.”
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The group wants support for a levy on big banks, variant on idea already examined, an dumped, by the federal government.
“It would ensure big banks meet baseline community expectations, either directly though their own regional branch network, or via a levy to keep regional banking services available” they said.
In February, big banks agreed on a moratorium on branch closures in regional areas for two and a half years, until mid-2027.
“The government handed down its budget papers on March 25 with no allocated funding to support regional banking or a plan to keep their branches funded and open” the mutuals collective says.
“This is despite the establishment of a Regional Bank Taskforce and a ‘Bank closures in regional Australia’ inquiry yielding little positive action from Canberra to assist regional bank branches.
“Instead, the Budget papers reiterated temporary band-aid commitments from the big banks to keep their remaining branches open for just two years and support for limited services at Bank@Post.
“There are increasing demands on regional bank branches to provide assistance with fraud and scams, cash handling services, along with the increasing cost of cash-in-transit services, and falling investment from the big banks in regional towns.”