Your Rural Bank deposit and the Government Guarantee
Is Rural Bank regulated?
Like all other Australian banks, Rural Bank is regulated by the Australian Prudential Regulation Authority (APRA). APRA currently supervises institutions holding approximately $3 trillion in assets for 21 million Australian depositors, policyholders and superannuation fund members.
Rural Bank, like all Australian banks, is licensed as an Authorised Deposit taking Institution (ADI). All ADIs are prudentially regulated by APRA.
APRA sets and enforces stringent prudential standards designed to ensure that under all reasonable circumstances, ADIs can meet their obligations to depositors. The standards set by APRA on ADIs include establishing minimum requirements in relation to the following:
- liquid assets and liquidity management
- capital adequacy and capital management
- governance arrangements
- financial reporting
- internal and external audit arrangements
- risk management
ADIs must comply with APRA prudential standards at all times and are subject to ongoing supervisory oversight by APRA.
Is Rural Bank covered by the Federal Government deposit guarantee?
On 12 October 2008 the Australian Federal Government announced that it will guarantee all term and at call deposit holders that have their deposits with an approved Authorised Deposit-taking Institution (ADI). This guarantee is for three years, at which point the Government will review its position.
As an Australian registered Bank, Rural Bank is an approved ADI. Therefore, all deposits with Rural Bank are currently eligible and qualify for the Government guarantee.
Further details about the guarantee are progressively being released by the Government. Once the full details of the guarantee have been released and assessed, we will provide our customers with an update, where relevant.
To download our Deposit Guarantee Fact Sheet, click here.
For more information about the Government Guarantee, visit www.treasury.gov.au.
How safe is Rural Bank?
Rural Bank has delivered a consistently strong financial performance since it was established in June 2000. Since its inception, Rural Bank has been providing specialised banking services and products to rural Australia and has maintained its conservative approach to financial management.
As a result, Rural Bank's balance sheet has proven resilient during times of drought and economic volatility. Rural Bank does not hold any subprime mortgages or any other 'toxic' and/or complex structured assets and has successfully avoided these assets.
Today, Rural Bank is largely funded by retail deposits, maintains a strong asset base, and continues to adopt strict investment guidelines for its liquid investments.
How has Rural Bank performed in the current market?
The combination of its deep knowledge of the rural sector and prudent financial management has served Rural Bank well in the current market.
Rural Bank's 2009 financial results demonstrate the strength of the bank with:
- $45.1m net profit after tax (up 10% from 2008)
- 27.8% cost to income ratio
- 14.2% return on average equity
- $3.68b loans under management
- total deposits of $3.75bn
Rural Bank has delivered these strong results during a period which has been challenging for many financial institutions.
What is Rural Bank's credit rating?
Rural Bank has an investment grade credit rating issued by Standard & Poor's of BBB / A2.
Does Rural Bank have any exposure to the US financial markets?
No. Rural Bank has no direct exposure to the US sub-prime mortgage market or to distressed overseas banking institutions.
All Rural Bank investments are made in Australia, either as loans to primary producers or as liquid investments in Australian registered ADIs. Over 50% of ERB's liquid investments are with banks that have a single A rating or better from Standard & Poor's.
Does the performance of Elders Limited affect Rural Bank?
Rural Bank is a separate company with its own board, management, staff and operations.
Importantly, Rural Bank is not reliant on Elders Rural Services Australia Limited or Elders Limited (the parent company of Elders Rural Services Australia Limited) for its funding and Rural Bank does not hold investments in Elders.
Hence, whilst both Rural Bank and Elders operate in rural and regional Australia, they are not the same company. Rural Bank is a bank, regulated by APRA, established as a joint venture between Bendigo and Adelaide Bank Limited and Elders Limited.
Can my financial adviser contact Rural Bank?
If you or your financial adviser or accountant would like to discuss any aspect of Rural Bank's business, they are welcome to give us a call - our Treasurer, Rudy Boeff can be contacted by phone (08) 8425 4914 or by email markets@ruralbank.com.au.
How do I find out more?
To find out more about Rural Bank, ask at your local Elders or Bendigo and Adelaide Bank branch, visit www.ruralbank.com.au or call our Customer Service Centre on 1300 660 115.
If your financial adviser or accountant would like to discuss any aspect of Rural Bank's business, they are welcome to call Rural Bank Treasury directly on 1800 644 824.
