by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Connexus : Issue 36
dead, it's certainly not pumping along in the way we would like. Diversity in funding is key for us and we think the government could probably do things quicker in securitisation than, say, the covered bond market." Abacus has praised the Australian Office of Financial Management program to buy residential mortgage- backed securities bonds from banks and mutuals, but believes there is capacity for more to be done in this area. It also believes improving account portability for disgruntled bank customers would help mutuals woo more members and gain extra funds in the process, says Degotardi. The risk at the moment is that mutuals will entice prospective new members to test their offer, but they'll find making the switch too hard and give up. Mutuals must make their product and service offer compelling, then ensure that leaving a big bank is as painless as possible, he says. "If we can make it seamless, we are halfway there." Another key issue is the government deposit guarantee under the Financial Claims Scheme, which has helped the mutual sector combat perceptions that bigger banks have greater protection under the regulatory system. With a review underway into the $1 million cap on the guarantee, Degotardi has a message for the government: "Don't pull the rug from under us with the deposit guarantee. We don't want our core funding base to be undermined while we're taking on organic growth and trying to win back market share from the major banks." Abacus says the deposit guarantee is no longer about market stability but about facilitating banking competition. If the government is serous about its notion of mutuals emerging as a "fifth pillar" of banking, it shouldn't touch the guarantee, says Degotardi. "If we want to grow as a sector and fulfil this notion of a fifth pillar -- no matter how big or small you think that is -- we need to have certainty around our future funding sources. We can't continue to grow unless we have both good and diversified funding sources." -- Cameron Cooper is a freelance writer. connexus www.abacus.org.au 35 FUNDING Abacus wants to explore the possibility of an aggregated model where a number of mutual financial institutions could issue covered bonds.