The industry superannuation funds which funded the establishment of ME Bank have never received a dividend on their investment.
The chief executive of ME Bank, Jamie McPhee today confirmed to the House of Representatives Standing Committee on Economics that no dividend had been paid to the shareholder funds, raising more questions from the committee chair, Tim Wilson.
Wilson described the arrangement as “very odd”, while McPhee argued that the superannuation funds had benefited from capital growth with respect to their investment in ME Bank.
McPhee confirmed that while no dividends had been paid to the shareholder funds, there had been some discussion of it doing so in the future if the bank generated sufficient capital.
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Bernie Fraser, Chairman of ME Bank from 2000 to 2015, "Members Equity Bank was started from the ofther side. It was to provide banking services to industry super fund members,"
Well, that statement makes clear to me that it ME Bank is in fact Member Services. And the fact that Superannuation money is being used to provide services outside of the provision of the Super Fund not not seem to be consistent with the Sole Purpose Test.
The fact that ME Bank has never paid a dividend to the poor members of the Industry Super Fund members who's superannuation savings this is via a "shareholding" is stretching long-term returns to it's very limits at best - and no dividend in sight.
Perhaps the capital contributed to ME Bank by the Industry Super Fund shareholders should more accurately be recorded as a fee for Members Services and therefore, disclosed in the relevant PDS of the shareholding Industry Super Funds.
The fact that ME is unlisted and valued at $1.2B is also of possible concern for members of the shareholding Industry Super Funds as former ME BAnk chief Executive Anthony Wamsteker said "there is always a risk" "anytime your have an unlisted asset you don't really know what it's worth until you try to sell it or list it on the stock market" What if ME BAnk is essentially member services (paid for out of the pockets of individual Industry Super Members super savings) but not disclosed as a fee? It could be worth ZERO.
Would you want to have your super invested in a Bank that never paid a dividend and you don't really know it's true value?
I wonder what other issues Industry Super has? Is it finally starting to come apart?
Where's Adele Ferguson hammering them on this, like she relentlessly persecuted planners and other 'banks' for anything that appeared to upset her delicate constitution?
This whole corrupt union ISA rort has to be toppled and deconstructed.
Richard Hedware, any comment buddy?
So by Wilson's logic someone who owns a block of land that earns no rent or other income can't be a decent asset to own? ME is reported to be worth $1.3bn, not exactly a chump change.
"ME is reported to be worth $1.3bn" - and that says it all. Who knows if it is worth that. Considering it requires the Shareholders (Industry Super Funds) to keep taking Super Members savings and giving it to this Bank, no dividend and what now appears to be little intention of dividends in the future, is it really an investment or is it being run as member services?
Is ME Bank a good investment? Perhaps not yet - so what is your definition of the long-term? Is it more then 1994 to 2020?
Do you know what the starting capital was and the return for investors? Dividends are not the be all, but returns verse risk are the end goal.
More importantly, who are they going to sell ME Bank too?
The only way to get the members capital back that has already been sunk into ME Bank is to sell it (as it appears they are relying on capital gains alone).
1) They could sell it to an outside buyer or list it. Can't see that happening.
2) Or simply sell it to more members of the Shareholding Funds as retiring members level and take their money and new member come in and effectively buy it from the old members at the valuation that see fit. That's a worry.
Rationally you could argue there is zero return, especially for any members who exited the fund. If something has returned nil dividends, and has never been formally valued and there is no clear process or attempt apparently to value it, then prior to putting it on market and selling it, there is no proof it has grown in value at all.
I'll go buy a little plot of land out back of Bourke for $50k and then add it to my asset valuation for $900k without any formal valuation to take a loan out with ME bank, and see how their own philosophy plays out...
Heddy, is that you under a different moniker?
Relax. ASIC is sure that APRA is looking into the matter, and APRA is leaving the matter with ASIC to investigate. it will all be sorted out very quickly. Meanwhile page 1 of the 2019 financials states ME Bank did pay a dividend on capital notes. I guess it is all in the definition of what is a dividend and who was it paid to..
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