‘We had big plans’: Firstmac laments Treasury decision

Earlier this week, it was revealed that non-bank lender Firstmac’s proposed acquisition of Maleny Credit Union (MCU) was rejected by Commonwealth Treasurer Josh Frydenberg.

The proposal would have seen Firstmac acquire MCU for $7 million, of which approximately $4 million would have been paid to MCU members, with each member receiving a payment of approximately $1,200.

According to Maleny’s CEO, Tony Ziemek, the proposed acquisition, which had been delayed by Treasury for several months following shareholder approval, was rejected due to concerns relating to “ownership issues that may have wider implications for the banking system”.

“This has been a very lengthy process, and the board are deeply disappointed that such a beneficial outcome for our members has been rejected,” he said.

Speaking to Mortgage Business, Firstmac managing director Kim Cannon has echoed Mr Ziemek’s sentiment, lamenting Treasury’s decision to curb the non-bank’s banking ambitions. 

“We are very disappointed by this result given how hard we worked with MCU to try and make this happen to the benefit of the people of Maleny and the broader Australian community,” he said.

“We looked forward to joining the Maleny community and building further on the great organisation they had made over the last 35 years.”

Mr Cannon said Firstmac was planning to invest heavily in the credit union and reposition itself as a genuine competitor to the major banks.  

“We had big plans to inject much-needed money into Maleny and bring real competition to Australian banking,” he said.

However, Mr Cannon added that he was unable to convince the Australian Prudential Regulation Authority (APRA) and Treasury of the transaction’s utility.  

“Unfortunately, we were not able to overcome APRA’s issues, even though at the very beginning of our journey together, they told us that this would be a rather straightforward transaction,” he said.

“I still truly believe that it is in the national interest not only to have competition in banking in Australia, but also to protect regional communities in Australia from losing the basic service of banking.”

Mr Cannon concluded by noting that Firstmac would continue to focus on its current operational strategy and the execution of “other new projects” to build its “next era of growth”.

Meanwhile, MCU is now seeking an alternative acquirer.  

“We have begun a process to identify a suitable organisation that can best meet our financial and social needs in a timely manner,” Mr Ziemek said.

Mr Ziemek said the credit union aims to have an acquisition “substantially completed” by 30 June 2020.  

[Related: Treasurer rejects lender acquisition]