NAB and Traditional Credit Union to expand Indigenous banking

Wednesday, 9 April 2008

As an extension of its aims to improve access to fair and affordable financial services in Australia, NAB today announced it would provide up to $1 million in interest-free loan capital and additional funding to assist Traditional Credit Union Limited (TCU) expand its banking services for Aboriginal communities in the Northern Territory.

Mr Ahmed Fahour, NAB Executive Director and CEO Australia, said that NAB and TCU would work together to open new TCU branches in the Northern Territory and explore ways help to address the financial exclusion of Indigenous Australia.

"Indigenous Australians are the most financially excluded group in this country and there is a growing demand for basic financial services. This arrangement with the TCU is a critical step in demonstrating our long term commitment to the aspirations of Indigenous Australia," Mr Fahour said.

Under the arrangement, NAB will provide TCU with interest free loans of up to $1 million (with no fees or charges) to fund the opening of branches in remote locations in the Northern Territory, providing access to financial services for more than 3,250 Indigenous customers, in the next five years.

In addition, NAB has created a grant, to the value of $200,000, for the TCU to fund activities as the new branches are opened over the next five years such as advertising, legal costs, development of brochures and website upgrades.

Mrs Cathy Hunt, General Manager of TCU said that Indigenous communities in the Northern Territory had been asking for some time for the TCU to expand its branch footprint, but it had lacked a sufficient capital base to do so.

"The costs to open new branches and the high costs of delivering financial services to remote areas has meant we haven't been able to expand as quickly as we would have liked. The arrangement with NAB removes some of those obstacles," Mrs Hunt said.

The first new TCU branch is scheduled to open in Angurugu on Groote Eylandt in June, with a further four branches in remote and regional areas of the Northern Territory planned in the next five years.

NAB will provide TCU customers with access to NAB's microfinance programs including the NAB Microenterprise Loan program.

NAB and TCU are also developing efficiency programs to help lower the costs of some of the TCU's back room processes and operations, and are investigating volunteering opportunities and secondments for NAB employees to work with TCU and vice versa.

"This is a great opportunity for NAB to learn from TCU in terms of delivering financial services to Indigenous Australians in remote locations.

"We also hope by taking this first step we can help more Indigenous communities have access to fair banking services," Mr Fahour said.

"We see this partnership as a way of extending our branch network to enable our members to build better lives for themselves and improve their financial knowledge through access to face to face services in the communities that they live," said Mrs Hunt

Media contacts:

Kerrina Lawrence National Australia Bank Tel: (03) 8641 3409 Mob: 0417 034 738 Email: kerrina.lawrence@nab.com.au

Kathryn van Aalst Traditional Credit Union Tel: 08 8927 3300 Mob: 0411 685 812 Email: bdm@tcu.com.au

A copy of ACOSS_speech_090408_Final.pdf is also available.

Background About Traditional Credit Union (TCU) Established in 1994 to provide culturally appropriate financial services to Indigenous people living in remote communities in the Northern Territory, TCU has a unique expertise and cultural understanding of issues relating to the successful delivery of financial services to Indigenous peoples in Northern Australia.

TCU is an Authorised Deposit-taking Institution (ADI), subject to the same prudential regulatory regime under the Commonwealth Banking Act 1959 as all other ADIs (banks, building societies and credit unions). As a mutual society, TCU is owned by its customers and provides banking services to Indigenous people by Indigenous people where they live in communities across the Top End of the Northern Territory.

TCU has some 14,000 Indigenous customers and twelve remote community branches in the Northern Territory. A head office in Casuarina (Darwin) and branches in: Milingimbi, Minyerri, Galiwinku, Gapuwiyak, Ramingining, Maningrida, Wadeye, Gunbalanya, Warruwi, Ngukurr and Numbulwar.

TCU offers face to face, online and telephone banking services and a range of personal and business banking products, including a number which are designed specifically around the needs and low incomes of their main customer base (e.g. family/clan accounts, personal loans, budget accounts etc). It also employs a financial counsellor to service the communities where it operates. English is the second - or third or fourth - language for many of TCU's members. TCU staff speak the local languages of the members they serve.

Eighty percent of TCU's total of 60 employees are Indigenous. TCU provides extensive staff training programs and has been awarded a number of training awards. Career pathways provided by TCU include customer service, administration and management.

NAB's commitment to microfinance NAB is committed to ensuring that Australians have access to fair and affordable banking services. In April 2006 NAB announced an investment of $30 million over three years to further develop not for profit microfinance programs in Australia, to assist low income earners gain access to affordable credit and insurance.

NAB provides capital support (a $10 million commitment to loan capital) for the No Interest Loan Scheme (NILS®), a community based program that provides interest-free loans between $800 and $1,200 for 12 to 18 month terms for individuals or families living on low incomes to purchase essential goods and services. Capital has now been allocated to more than 100 NILS® groups across Australia. With Good Shepherd Youth & Family Service, NAB also provides Step UP loans, a low interest personal loan designed for people living on low incomes. The loans have a fixed interest rate of 7.24% (comparison rate 7.24% ) for amounts between $800 and $3,000 and are available for terms of up to three years. Step UP is a not-for-profit program, first launched in 2004, it currently has over 700 loans written to the value of $1.5 million.

NAB also offers microenterprise loans to help start up or support existing businesses for people on low incomes who have few or no avenues to access affordable business credit. This program was launched in March 2007 and currently has over 70 loans written to the value of $1.1 million.

These microfinance programs are delivered on a not-for-profit basis as part of NAB's corporate responsibility. They carry subsidised interest rates and costs for the financial literacy support for recipients. More information is available at www.nab.com.au/community

NAB's programs for Indigenous Australians NAB supports several programs focused on supporting Indigenous Australians, including:

  • Indigenous education and employment - a focus on providing development opportunities for Indigenous Australians with mentoring and cultural support. NAB offers student-based traineeships and an Indigenous Graduate Strategy through the Aboriginal Employment Strategy (AES), an Indigenous scholarship through the Melbourne Business School and Charles Darwin University, and, in partnership with Group Training NT, finance apprenticeships.

  • Building Indigenous business capacity within the Torres Strait - NAB works with the Queensland Government and the Torres Strait Regional Authority (TSRA) Community Business Hub to assist the development of local business initiatives. Four to six NAB employees annually have a three to four-week placement in the Torres Strait to provide business expertise.
  • Yachad Accelerated Learning Project - a three-year educational intervention program aimed at raising the scholastic achievements of students in remote and rural locations in Australia, particularly those with a high proportion of academically low achieving Indigenous students.
  • National Indigenous Money Management Agenda - NAB is a member of the Indigenous Banking Reference Group whose aim is to involve government and the financial sector in contributing towards improving the lives of Indigenous people through working with them to enhance money management skills, and provide access to appropriate financial services and products.
  • Welcome to Country - a personal awareness and social education program primarily aimed at NAB's people leaders. The program exposes the participants to leaders and members of Indigenous communities in rural Australia, allowing them to hear their stories, ask questions and gain a deeper understanding of these communities.

More information is available at www.nab.com.au/indigenous

1 Comparison rates are based on a loan of $2500 over a term of 2 years. A comparison rate schedule is available from the community microcredit worker when you go for an interview. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Such unsecured loans would normally attract an interest rate of about 14 to 16%.

* The information contained in this media release is for media advice purposes only. The contents are true and correct at time of publishing/issuing, however may change over time. For further information about NAB products or rates, please go to Interest Rates, Fees & Charges