'Pam's Bank' readies for action

By KEVIN TAYLOR

James Munro's office on the 29th floor of Wellington's Grand Plimmer Tower looks down on the tops of highrises housing Westpac, ANZ, and ASB.

Off to the left he can see Radio New Zealand House, with the offices of Government-owned Kiwibank.

Soon, they will all be his competitors.

Chief operating officer of the St George/Foodstuffs joint banking venture announced in November, Munro is excited about its future.

He says the joint-venture partners are committed to building a full-service bank in New Zealand, and becoming a significant player.

The bank has had a brand name since last year, but Munro will not reveal it before the launch in a few weeks. In the meantime the in-house name is "Pam's Bank" - Pam's is the Foodstuffs brand widely promoted by celebrity chef Jamie Oliver.

The venture will not make profits until its third year of operation, he says.

But Munro predicts the brand will rapidly gain public recognition.

He bases that on the huge exposure the bank's products will get in the 471 Pak'n Save, New World, Four Square and Write Price stores Foodstuffs runs in New Zealand.

Every week between 3.2 million and 3.5 million customers pass through the doors, and Munro says they are satisfied customers who come from a cross-section of demographic groups.

"As long as we get our marketing and our positioning right ... we will become I believe within 12 months one of the best known brands in this country."

St George Bank New Zealand - which will not be the brand name - applied for bank registration from the Reserve Bank in November and Munro understands approval is imminent.

Registration will give the joint venture the right to call itself a bank, and also mean it has to disclose quarterly financial information like other banks.

The supermarket banking venture has been called a gutsy move in a competitive market by KPMG banking and finance group chairman Andrew Dinsdale.

But Munro rejects claims the banking scene is already crowded.

He says it cannot be crowded if banks are making such huge profits. The latest full-year results of the biggest five banks reveal that in total they earned $2.2 billion in net profits.

Munro's observation echoes that of Kiwibank chief executive Sam Knowles, who told the Business Herald last month that the banking market was not working properly if every single competitor was increasing its profits.

"If the banking market was overbanked, banks would not be making the level of profits that they are," says Munro. "You would have banks failing if the market was overbanked. That's not happening."

On how big the joint venture planned to get, Munro said: "How long is a piece of string? We hope to be very big. Why limit our ambitions?"

But he says they do have realistic expectations. "We think we have got a business plan which is very solid and well-founded in a conservative sense."

The first banking product will be available through all 471 Foodstuffs outlets before the end of March but Munro will not reveal yet what sort of account it will be.

Soon, checkout operators will be able to do deposits and withdrawals for account holders, but Munro says the aim is to avoid checkout delays.

More complex banking issues will be handled over the phone and internet, he says, and mortgage brokers and a sales force may also be used.

Internet and telephone banking, through a Wellington call centre, will also be ready at launch.

Munro says ATM access has been negotiated through Westpac, and that will start when the transaction account is launched.

Munro, 38, lives in Auckland but will shift to Wellington at the end of this year with his wife and two children.

He was head of strategy at TVNZ until restructuring in late 2001.

He also lived in Britain for 11 years and saw two supermarket chains, Tesco and Sainsbury, introduce banking. The two companies have shared their experiences with Foodstuffs and St George.

The joint venture with Foodstuffs has allowed St George, Australia's fifth largest bank, a low-cost gateway into New Zealand.

St George managing director Gail Kelly said in November that the bank was spending "single-digit" millions on set-up and entry costs.

Munro says Foodstuffs has been working on supermarket banking for three years, and the joint venture has evolved over the last 12 months.

"Our business plan is very different to a traditional bricks and mortar bank, and possibly even quite different to Kiwibank," he says.

"The idea of a physical bank built inside the store is not what we are out to achieve. The idea of supermarket banking is to integrate the bank with the existing store footprint."