Mutual bank addresses Senate inquiry into bank closures

The Senate inquiry into the economic and social impacts of regional bank closures held in Cloncurry (Queensland) on Wednesday (17 May) has heard from several Queensland councils, Queensland Farmers’ Federation, small businesses, and community members as well as the newly merged entity of Heritage Bank and People’s Choice Credit Union.

Acknowledging the difficulties felt by regional communities, the chief executive Peter Lock told the committee that “we can’t put the genie back in the bottle, but we can apply a different way of thinking.”

“For example, Heritage has a community branch model and the community model [where] investors from the immediate area, form a community-based company and then Heritage partners with this company to form a joint venture,” Mr Lock said.

Heritage introduced the model in Crows Nest in 1999 and since then has spread into a further six communities in Australia.

“Both Heritage and the company contribute to the set-up costs of the venture and then share ongoing expenses with the joint venture company directors,” he explained.

When asked what the set-up costs were, Mr Lock explained that the “ballpark figure” was around $500,000 as seed capital for set-up.

He added that, when approached by interested parties, the bank would do a presentation to the community about what is involved.

“The model does have limitations and different regions have different issues, population numbers, customer requirements, investment levels,” he said.

“There’s no one answer but the model can be modified and it does show that there are alternatives to the traditional branch approach.”

However, he agreed with the Senate that it could be a fairly arduous process.

In addition, apart from the community banking model, Mr Lock suggested government-run services where there is a banking hub that also provides registration service or other offers and includes a banking service.

Westpac defers some branch closures

The regional banking inquiry comes as dozens of bank branches have been closed across the country in recent months, and looks at the failures over the handling of these closures (as found in the Coalition’s Regional Banking Taskforce, which was handed down in September 2022).

The Senate praised the work done by Cloncurry Shire Council in spearheading the inquiry and bringing the issue to the forefront of their attention.

“It’s helped enormously to get delivered good results,” a senator said, noting the reopening of Westpac in Cloncurry community as a positive result.

While Westpac had previously announced the closures of 20 branches across four states ahead of the inquiry, it recently postponed the closures of around eight branches. The major bank was also invited to the hearings but declined.

A spokesperson said: “For the Committee’s awareness, we have today advised the councils and stakeholders in each of the eight locations where our branch closure decisions were paused, that Westpac will be keeping these branches open (i.e. the decision to close is reversed), and that we are currently negotiating lease extensions in each location. This includes Cloncurry and Ingham.”

Cloncurry mayor Gregory Campbell welcomed Westpac’s decision to keep the regional branches open, given its large agricultural business dealings.

“It just made no business sense why they would want to turn their back on us,” Mr Campbell said.

“We’re talking billions of dollars in half a dozen accounts, to have somebody that is based in the area that can travel to those properties that gets a feeling for what the industry is doing and what the potential is can only be done with staff on the ground.

“Ultimately, our town deserves better treatment than what we got. But we’ve got a good outcome mutually over the last couple of months.”

Mr Campbell told the Senate, that council had received notice in February that the regional branch was closing and spoke with major agribusinesses in the area to gauge impact, which was relayed back to the bank.

“What ensued after that was some really great dialogue with senior bank executives, which led to a pause on the closure and the subsequent reversal of the decision,” Mr Campbell said.

“It’s a great win for our community.”

The second day of the two-day hearings will take place in Ingham on Thursday (18 May) inviting representatives from Australia and New Zealand Bank (ANZ), Bendigo and Adelaide Bank and Suncorp Bank, as well as the local councilor and community members.

[Related: Senate to hold regional banking inquiry]