Self-help answer to bank problem

By Ken Lewis

MAUNGATUROTO - Faced with the closure of their only bank, residents of Maungaturoto and Waipu have decided to launch their own banking service.

The scheme was hatched just days after the National Bank announced it would close the towns' only remaining banks.

The proposed community banking service would be run as a non-profit organisation for both settlements.

Proponent of the scheme Tony Schicker, a Maungaturoto businessman, said the service would operate under the Maungaturoto community trust in partnership with the major banks. The trust would act as an agent for the banks, accepting deposits and making withdrawals for members, probably from existing bank premises in each town.

Deposits would be ferried daily to participating banks in Whangarei by a security van and deposited in the usual way.

The service would be paid for through separate transaction charges, with any profits going back to the community.

Mr Schicker said he had received positive responses from banks to the idea.

"We had thought of enticing another bank into town to replace National, but we realised [other banks] were just as likely to pull out as well.

"Then someone asked why we didn't start our own bank."

But Massey University professor of finance and banking, Chris Moore, said it would be extremely difficult for the two Northland towns to provide more than a limited deposit service.

Trust banks started from similar community needs, but were guaranteed by the Government and covered by legislation.

Professor Moore said the community-run banking service could act as an agency for major banks, but there would be few protections for either the banks or depositors.

"Security is the big issue. What happens if the deposits are robbed? Who pays the depositors?"

He said providing other services, such as cashing cheques, would bring the service into the league of credit unions, which were strictly controlled to protect depositors.

"They would have to be subjected to Securities Commission monitoring, have a chief executive and provide a prospectus."

He said it was not impossible to achieve, but would require substantial financial backing.

Meanwhile, Kawakawa could get an expanded banking service just months after WestpacTrust closed the town's last remaining bank.

Far North district councillor Johnson Davis said WestpacTrust and PostBank were considering a package to provide extra services, although a final decision was some way off.