Presentation is loading. Please wait.

Presentation is loading. Please wait.

Abacus Lobbying Priorities AM Institute Risk Forum – Barossa Valley, November 2012 Mark Degotardi, Head of Public Affairs Abacus.

Similar presentations


Presentation on theme: "Abacus Lobbying Priorities AM Institute Risk Forum – Barossa Valley, November 2012 Mark Degotardi, Head of Public Affairs Abacus."— Presentation transcript:

1 Abacus Lobbying Priorities AM Institute Risk Forum – Barossa Valley, November 2012 Mark Degotardi, Head of Public Affairs Abacus

2 2 Today  Identify some challenges in the operating environment  What on earth is lobbying anyway?  Identify some regulatory risks  Abacus’ main focus for 2013  Risks and opportunities for mutual ADIs  Questions

3 3 The Operating Environment

4 4 4 Strong fundamentals 18% 28% 10% 8% 30% 26% 7% Estimated percentage of population by state who are members of mutuals

5 5 Strong fundamentals

6 6

7 7 Customer Satisfaction at 31 October

8 8 8 Key providers in bank dominated market Source: APRA & RBA

9 9 9 But we have changed over time Mutual Sector – Distribution of ADIs by asset size ($bn) Source: 2011 Mutual Sector Annual Reports

10 10 Some reality checks in a tough market 1.Growth - below system for assets and deposits - At system for loans

11 11 Some reality checks in a tough market 1.Growth - below system for assets and deposits - At system for loans 2.Profitability -constrained (ROA at 0.56% vs 0.70% a year ago) reflecting margin pressure (10 bps decline) -cost/income increasing (CUFSS group up 58bps, includes 81bps increase for $1bn+ group)

12 12 Our environment - market Source: APRA Note: Mutual Banks Bankmecu, Defence Bank, Heritage Bank, QT Mutual Bank, Teachers Mutual Bank, and Victoria Teachers Mutual Bank excluded from the analysis.

13 13 Our environment - market Source: APRA Note: Mutual Banks Bankmecu, Defence Bank, Heritage Bank, QT Mutual Bank, Teachers Mutual Bank, and Victoria Teachers Mutual Bank excluded from the analysis.

14 14 Some reality checks in a tough market 1.Growth - below system for assets and deposits - At system for loans 2.Profitability -constrained (ROA at 0.56% vs 0.70% a year ago) reflecting margin pressure (10 bps decline) 3.Funding under significant pressure -Major banks take share of deposit funding above 50% -Term Deposits account for almost half of retail deposits at major banks -Majors estimate further increase in funding costs for retail deposits

15 15 Our Environment - market

16 16 Lobbying and Politics

17 17 Faith in Political Leadership In my lifetime, we’ve gone from Eisenhower to George W Bush. We’ve gone from John F. Kennedy to Al Gore. If this is evolution, I believe in twelve years, we’ll be voting for plants. Lewis Black

18 18 Our Environment – politics  Partisan divide hampers genuine policy work  Government likely to hold through mid/late 2013 but Gillard and Abbott both under pressure  Hockey, Robb have committed to FSI  Government annoyed at our calls for further reform (but this is OK)  Public apathy?

19 19 Lobbying – part of democracy?

20 20 Lobbying – slightly stinky?

21 21 Basic principles  Influencing decision makers –Recognition –Accommodation –Promotion –Risk reduction –Support –Solve problems 21

22 22 Recognition “Most importantly, as mutual organisations, credit unions and building societies always put their members first. They are not-for-profit lenders — so they put their profits back into cheaper interest rates, lower fees, and better customer service.” - Deputy PM, December

23 23 Strategy & tactics  Engage at all points in the policy development process: - Public debate - Consultations, reviews and inquiries - Legislation and regulation - Implementation - Oversight of regulators  Elections: a chance to extract commitments, lift profile 23

24 24 What’s the message?  Decide the message; repeat the message  Political cliché that’s true: when the politicians and reporters are so sick of hearing something they want rip their own ears off, most of the voters are just picking it up  You’re the expert on your industry  Conflict sells – but avoid where possible  Always frame an issue from the consumer perspective; big banks can’t credibly do this (but they’re trying!) 24

25 25 Take your chances  Public debates  Be available to media  Parliamentary inquiries  Govt policy development  Regulator policy consultations  Brief the Opposition – they’ll be the next Govt  Connect local CUBS with local MPs  “How can we help?” 25

26 26 The Regulatory Environment

27 27 Our Environment – regulation  Industry “exhausted”  CFR holds enormous sway and has written off concepts on RMBS, new guarantees, AOFM mandate expansion  Budget constraints impact even mild revenue issues making substantial reforms even harder

28 28 Competition: regulatory story (so far)  Positives: –Treasurer promotion of mutuals since 2010 –Banking competition policy centred on mutuals –Legislative recognition (eg covered bonds) –Deposit guarantee maintained at upper level proposed –AOFM support ($1.66bn utilised by mutuals) –FSAC representation, face to face meetings for larger members  Realities –Account switching, exit fee bans limited impact –AOFM boost limited to large mutuals,+B note issue –Major banks now dominate market on both sides –Significant proposals (eg Canadian style RMBS support, expansion of guarantee for fee, AOFM mandate) rejected –Limited signs of member appetite on covered bonds (to date) –Regulator influence and dominance

29 29 Lobbying Agenda – positive traction Regulatory Wins  DG at upper range of $250K  GST RITC Item 16 restored, saving $1.6M annually  APRA public commitment to work on BIII capital issues  Basel III liquidity  FoFA carve-outs expanded to benefit mutual ADIs  Less prescriptive training rules for ADIs on credit  Changes to unclaimed monies bill More to do...  Secure concessions on BIII capital, liquidity  Mutual friendly capital supported and encouraged  Legislative fix on ASIC TD interpretation & BDPs  Position for “Wallis Mk II”  Positive Credit Reporting  Franking Credits & mutuals

30 30 Regulatory Focus  Basel III capital

31 31 Regulatory Challenges Capital impacts for mutuals Tier 1 Capital definitions Non-viability clauses Accelerated timetable Abacus response

32 32 Basel III - capital Senate Economics Committee 9 August 2012

33 33 Regulatory Focus  Basel III capital  Financial System Inquiry  Liquidity Standard  Review of APS120  Basic deposit product definitions  Comprehensive credit reporting  Payments reforms – EFTPOS, governance  FATCA  Taxation including franking credits  Bankruptcy

34 34 Positioning – more to do  Media profile is growing, media is changing  Recent release of DAE report generated TV, radio, print nationally  Increased focus on partnership with members – “talent”  Still relatively unknown, hugely outgunned

35 35 Media presence underpins our advocacy Media report on us Consumers read/talk about us Government hears us and recognises our value Building a balanced approach to Customer Owned Banking

36 36 Risks and Opportunities

37 37 Competition – not going away

38 The Perfect Storm

39 Have we got the balance right?

40 Cooperation?

41 Do we?

42 Sometimes impossible becomes reality

43 Thank you


Download ppt "Abacus Lobbying Priorities AM Institute Risk Forum – Barossa Valley, November 2012 Mark Degotardi, Head of Public Affairs Abacus."

Similar presentations


Ads by Google