ME Bank boss resigns
Move follows controversy over changes to mortgage redraw
THE long-serving chief of ME Bank has resigned abruptly on the heels of the industry superannuation fund-owned lender being caught up in controversy over changes to its mortgage redraw facilities.
ME Bank on Tuesday said chief executive Jamie McPhee would step down from the role after more than 10 years in charge.
Chairman James Evans announced the resignation, effective on July 31, without making reference to the redraw furore that forced the bank to apologies and reverse its policy.
Finance chief Adam Crane will step in as acting chief while a search process is conducted.
ME Bank came under fire from customers and was forced to appear before a federal parliamentary committee in May after it controversially unwound a popular redraw facility that allowed customers to access home-loan principal payments that had been made ahead of schedule.
The changes, which resulted in funds being shifted from redraw accounts into mortgage accounts, were quietly introduced as households were being battered by the economic effects of the pandemic.
ME Bank said it made the changes to protect customers from possible financial stress by ensuring they did not inadvertently withdraw funds over their repayment schedule.
But it conceded it should have revealed the changes before they were made and pledged to restore funds for any customer who requested it.
Mr Evans paid tribute to Mr McPhee, noting ME Bank had grown under his leadership.
Customer numbers increased from 234,000 to 542,000 and assets rose by 50 per cent to almost $30bn.
“Notably, ME has continued to achieve primacy in customer satisfaction,” Mr Evans said. “Importantly, Jamie has steered the bank through significant change in the industry and the macro economic environment.”
Mr McPhee’s departure comes amid speculation the 26 industry super funds that own ME Bank, including AustralianSuper, HESTA, and Sunsuper, are pushing to sell the lender, which was established in 1994.
The bank was set up to inject competition into the sector and deliver a “reasonable” return to shareholders but it has never paid its owners a dividend.
Mr McPhee said he was looking forward to taking some time out before considering what to do next. “The timing is right for me and it’s right for the bank,” he said.
“After 10-and-a-half years as CEO, I believe now is the best time to hand over the reins to give ownership of the bank’s post-COVID strategy development and long-term execution, to a new CEO.
“In deciding to call time, I know the bank is in a strong position financially and is well placed for the future but that the industry challenges ahead and resulting need for change, will require a long-term commitment.”
ME Bank posted a net profit of $67.1m for the 12 months to June 30, 2019, down 24.7 per cent on the previous year.
Its home loan book increased by 7.7 per cent to $26.3bn — which exceeds industry growth — while deposits climbed 13.4 per cent to $8.6bn.