Australian credit unions have welcomed the Federal Government’s move to guarantee deposits with all credit unions, banks and building societies.
Chief executive of the industry body covering credit unions and building societies, Abacus, Louise Petschler described the Government’s move as “strong” and “decisive”.
“The guarantee removes any worry for Australians and means that every deposit with a credit union, bank or building society has full Government support,” she said.
Petschler said that Abacus had been in consultation with the Government on its plan and particularly endorsed the decision to remove any “cap” for deposit guarantees — something that provided the best outcome for confidence and stability.
“As authorised deposit-taking institutions (ADIs), credit unions and building societies meet exactly the same strong regulatory framework as banks under the Banking Act 1959, including strict prudential standards on capital, liquidity and credit risk,” Petschler said. “Our sector’s performance as prudent and responsible ADIs means that we collectively hold a larger share of Australian household deposits than any bank other than the [Commonwealth Bank of Australia].”
She said Abacus had also backed the Government’s move to support term facilities for Australian ADIs and called for close consultation with the mutual banking sector to ensure access.
“It’s critical that credit unions and building societies — now the main competitors to the big banks — are able to benefit from these measures to continue our vital competitive role,” Petschler said.
