Australia’s largest building society has said that it will not be changing to a bank any time soon, as it wishes to keep its distance from the “negative stigma” attached to banks in the current environment.
Speaking to Mortgage Business, the chief executive officer of Newcastle Permanent, Terry Millett, said that if the building society were to move from being a mutual building society to a mutual bank, it would be “the largest mutual bank in Australia”.
He said: “We have more than a billion dollars in total assets more than Heritage Bank, which was also a building society.”
According to Newcastle Permanent’s financial report for the year ending 30 June 2016, the building society held just over $9.7 billion as at 30 June 2016.
However, Mr Millett said that the mutual will not be changing to a bank in near future.
He explained: “Our view is really that we're basically balancing what we see as the benefit of being a building society versus a bank, against the cost.
“The benefit we see is that we can do anything a bank can but we don’t carry the negative stigma that comes from being known as bank and getting some of the wash off of what the community thinks about banks.”
For example, Mr Millett noted the House of Representatives Standing Committee on Economics’ inquiry into the four major banks (ANZ, Commonwealth Bank of Australia, NAB, and Westpac), and recent headlines regarding poor financial planning advice from some of the major banking players.
The mutual CEO concluded: “We're very pragmatic about this rather than ideological. At the moment we see that there is a net benefit [in being a building society]. But there is a cost, and that cost is that we have to spend time explaining to new customers what a building society is.”
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