Great day for Kulin

27 Oct, 1999 09:59 AM
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THE first community-backed Bendigo Bank in WA opened its doors in Kulin on Monday, paving the way for four more branches starting in the next few months. After the closure of the local branch of one of the "Big Four" banks in March 1998, the Kulin community rallied in an attempt to keep their money in the district. Kulin Shire chief executive Greg Hadlow said the community was suffering both from the loss of the service and the closure's flow-on effect that had seen another business close as money went out of the town. The shire's attempt to to stem the outflow of cash led to Mr Hadlow joining a WA delegation to Victoria to investigate the fledgling community banking system. Inspired by Bendigo's community bank concept, which started about a year ago and now has 13 branches in Victoria, NSW and South Australia, the Kulin district decided to bring it to WA. The Bendigo Bank concept is essentially a franchise, where the community owns the bank, the infrastructure and pays the employees' wages and uses Bendigo's services to do the backroom banking. Only 13 weeks ago, the locals decided to form a company and issued a prospectus to raise the $250,000 required to set up the bank. The prospectus was over subscribed, as the community embraced the opportunity and raised $288,000 with more money coming in. Construction of a building to house the bank was started by an entrepreneur nine weeks ago, finishing just in time for the opening last Friday. Under the arrangement, any profit the bank makes will be split between the Bendigo Bank Group and the local community, which will decide how the dividends will be spent. That could include funding the $200,000 community obligation for the bank's running costs, such as wages, or pursuing community projects or paying a dividend to shareholders. With four such banks in other states making a profit in their first 12 months, Mr Hadlow was confident a profit would eventually be achieved. He said the community needed $20 million on the bank's books for it to break even. "We've got $3m on the books already, that is unbelievable, we haven't even opened yet," Mr Hadlow said. "But I don't know if it would work for every community, because you need a lot of support and patronage like in Kulin." At the opening of the bank last week, Kulin Community Bank Committee chairman Graeme Robertson said the community had "earned" the right to have its own bank and it now needed community support to be successful. "We want to be in a profit situation in the shortest possible time," Mr Robertson said. Regional Development Minister Hendy Cowan said the National Party was particularly supportive of this concept and the State Government had provided $5000 for the feasibility study. As a demonstration of its support, the National Party sitting members have transferred their parliamentary account to the new branch. Avon MLA Max Trenorden could barely contain his excitement at the opening of the bank, having been particularly involved in the initiative as the head of a taskforce examining the impact of bank closures on the rural community. Mr Trenorden said the taskforce found that, every time someone leaves a country town to do their banking, they take $200 each with them, which added up to about $500,000 out of every town each year. He now plans to move his personal account to the Toodyay branch of Bendigo Bank when it opens in the next few months. The Goomalling branch of Bendigo Bank will open tomorrow, while Tambellup and Cranbrook branches will start trading early next month. Bendigo Bank Group managing director Rob Hunt was extremely proud of the expansion of the group's network to WA, which he said was built on the basis that successful communities created successful banks. Mr Hunt said the entry of Bendigo Bank to WA had also injected competition into the banking market that would benefit the industry as a whole. He said Bendigo Bank would succeed in the rural market where others had failed because the local branch would have overwhelming community support. "It uses the power of the community with the banking skills that Bendigo Bank has," Mr Hunt said. "The objective of both parties is to run a profitable business because that will sustain it in the long term."

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