New Bank To Use 3200 Agents
The Age
Tuesday November 15, 1994
Sydney.
Australian consumers will get a taste of the ``bancassurance" concept when the newest locally incorporated foreign bank, ING Mercantile Mutual Bank Limited, begins operating on 1 December.
The new bank, a wholly owned subsidiary of the Dutch-based ING Bank, will absorb Mercantile Mutual's existing financial and insurance operations and use its distribution network to sell a range of retail and commercial banking services.
Rather than following the established banking route and setting up a branch network, ING Mercantile Mutual will use more than 3200 independent agents, financial advisers and insurance agents to sell its new products. And by avoiding investing in bricks and mortar, exploiting new communications technology and paying agents on a commission basis only, Mercantile Mutual believes it can operate with an extremely low cost structure.
In effect, Mercantile Mutual has taken the low-cost insurance model where there are few on-going staffing costs and a distribution network that is paid on results, and turned it into a bank.
Mercantile Mutual's managing director, Mr Phil Shirriff, said the aim was ``a total relationship so that the client who has his superannuation with us, or his investment products with us, also sees us as the place for his banking as well".
The advantage of becoming a licensed bank backed by a global bank with $157 billion in assets and $15 billion in annual revenue, he said, was that it would give the new bank a better credit rating, allowing it to raise funds at lower cost in the wholesale capital markets.
As it stands, ING Mercantile Mutual will rely on its existing supply of retail funds to finance about a third of its lending activities.
The rest will come from banks, merchant banks and a regular Eurobond issue.
Mr Shirriff said the focus of its parent, the ING Bank, on emerging markets would stand the new bank in good stead.
``Our parent, the ING Bank, hasn't actually been one which has gone charging off into the major markets, it's focused heavily in some of the smaller markets, the emerging markets which tend to be trading partners with us."
© 1994 The Age
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