Company update for depositing members
22 September 2008
There continues to be focus within the media regarding a slowing global economy, credit market turmoil and the US sub-prime crisis. This has been further fuelled with the announcements by NAB and ANZ over their decisions to increase loss provisions on international investment exposures and now more recently the decisions taken by the US Federal Reserve to support various US financial institutions and the larger insurer AIG.
While some CUA members may be worried about how these events in the US may affect their credit union, CUA Managing Director Graham Olrich has assured members that CUA (Credit Union Australia) has no exposure to the US sub-prime market and has no international assets.
“CUA is uniquely different from many Australian banks in that we only lend to our members who are all Australian based,” Mr Olrich said.
“Our retail deposits are lent primarily for home loans and residential investment property in Australia. These make up 80% of our loans with some personal loans for cars, home improvements and other worthwhile purposes.
“Due to these factors, CUA does not have any exposure to the sub-prime market in the US and, unlike some of the banks; we have not suffered any losses associated with investments in those markets.”
Mr Olrich further explains that CUA has been operating in Australia for over 60 years and has an impeccable record with no depositor ever having lost a cent by depositing in either CUA or any other credit union.
“As Australia's largest credit union, CUA has built up considerable strength through prudent management practices and now has over $500 million in free reserves (retained profits),” he said.
“This factor provides comfort to all depositors that we are a safe and secure place to deposit funds – and now is a great time to take advantage of very competitive interest rates on deposits also.”
“Deposits in Australian banks, building societies and credit unions are all regulated under the same laws and capital standards to help provide depositors with security.
“While the Australian Government does not guarantee deposits of any bank, building society or credit union, they have recently released a draft proposal to insure deposits up to $20,000 per individual per institution.
“The Government has not indicated a time frame for implementation of this proposal. However, the law will continue to provide depositors priority over the assets in that institution.”
