Demutualisation by Stealth

My State Financial AGM – Wednesday 15th October (tonight), Wrest Point – 6pm

It’s revealing that nowhere in the announcement about the proposed merger between MyState Financial and Tasmanian Perpetual Trustees do the proponents use the words ‘demutualisation’ or ‘Credit Union’.

If the proposed merger takes place MyState will lose its Credit Union status and the new entity will become a publicly listed company and, as such, subject to all the vagaries of the market and thus more vulnerable to hostile takeover. It’s probable that within a few years it will be absorbed by one of the “Big 4” and Tasmania will lose its largest locally owned financial institution. When that happens most of the employees will be made redundant as services are ‘rationalised’ and branches closed down. Current credit union members will find themselves with a handy parcel of shares in the new entity (the carrot) and the directors will, no doubt, receive very generous golden handshakes for delivering the minnow into the mouth of the whale.

The directors claim that this is the only way to grow the business and to provide financial returns to members. I wholeheartedly agree that members should benefit from the profits made but growth could also be assured by offering better interest rates and lower service fees. This would reward members in proportion to their financial involvement and be of positive long term benefit to our community as a whole. This might be a more positive outcome for both members and the wider community. This might be better than simply generating dividends for shareholders and fat salaries for directors (and golden handshakes when the takeover happens). In recent months as we’ve seen some of the world’s largest financial institutions buckle the simplistic idea that big automatically means better has taken a battering .

Talk about déjà vu. It was only back in 2004 that Connect directors spent more than $1¼ of members’ money unsuccessfully trying to demutualise and here they go again. And they want us to vote them a pay rise to do so. This time, however, they’ve learned not to use the “D-Word”. Don’t mention the war!

With the MyState Financial AGM to be held in the Wellington Room, Wrest Point Casino at 6pm on Wednesday 15th (tonight) it might be worth attending. Come along and vote.

Patrick Synge

Lymington