Cover Stories
Cover Story
In an era when everyone hates banks more than ever, ME Bank is looking to capitalise on its heritage and ownership to build its position over the next couple of years. It may even be “keeping the bastards honest”, as the inimitable Don Chipp said in the lead-up to the 1980 Federal election.
Let’s face it: ME [Members Equity] is still a bank. But one of the good things about this bank is that it has a new chief executive who is committed to delivering the sort of services wanted by the members of the 35 industry funds which own it. ME Bank began, in 1994, as Super Members Home Loans, then half-owned by the then National Mutual (now AXA). It’s now being run, since last month, by a 21-yearveteran of another successful boutique bank, Bendigo and Adelaide Bank – Jamie McPhee.
The one certainty about superannuation over the next 20 years is that it will grow. It’s the miracle of compound interest plus a legislated minimum of the flow of foregone wages every week. The structure of the industry, either through evolution or new regulation, is a little more difficult to predict. There will be fewer but larger funds, perhaps even more SMSFs [when will they stop growing in number?] and perhaps fewer managers. The influence of sponsoring organisations, such as unions and employer bodies, may wane – with or without possible legislative change to the make-up of trustee boards – with the sheer size of funds and continued push for professionalism and best practice.
For most super funds and other Australian institutional investors their experience with the ownership of infrastructure assets has, by and large, been a happy one. Not the same can be said for all such investors. Each of the eastern States has at least one disastrous toll road experience for investors and many retail investors in listed infrastructure funds were taught a painful lesson by the GFC.
According to Mike Fitzpatrick, a veteran of the asset class, much of the recent criticism of infrastructure – and certainly that part assigned to the investment banks which packaged and promoted many funds – is justifiable. He predicts that the days when investment banks fed transactions by outbidding each other to win tenders and then structuring the investments into funds, often with long-term management contracts in place, are hopefully over.
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