Michael Cameron FAICD on merger of mutual banks

Thursday, 01 June 2023


    Bringing people together is a skill and a passion for the chair of the merged Heritage bank and People’s choice Credit Union, Michael Cameron FAICD. 

    Clan Cameron, one of the most ancient kinship groups of Scotland, is known for its “Five Arrows” crest. The sheaf of five arrows tied with a band represents the five branches of the clan, united under the leadership of the Camerons in the Scottish region of Lochiel in the 16th century. 

    Five years ago, Michael Cameron FAICD took the Five Arrows name for his 100ha cattle and sheep property in the NSW Southern Highlands, a testament to his heritage, which lives on in his five sons with wife Michelle.

    “I was originally born in Cootamundra,” he says. “While I didn’t grow up on a farm, the property takes me back to the smells and the experiences I had as a child and makes me realise just how harsh the Australian environment is and how fragile we are with nature.” 

    Reuniting with the land coincided with the former Suncorp banking chief and GPT property group CEO taking the chairmanship of the rural-focused, South Australian-based People’s Choice Credit Union in 2019.

    Last year, it agreed to merge with Queensland’s Heritage Bank, completing a process begun in August 2021. Member approval was secured in December and the merger was officially completed on 1 March. The new entity will continue trading under the existing brand names for approximately 12 months before rebranding. 

    The new mutual bank is the country’s ninth largest, with a combined customer base of 720,000, 1900 employees, 95 branches and a loan book of around $23b. It is also one of the top five mutual banks globally.

    As chair of the merged group, Cameron sees the tie-up as a milestone moment for the mutual banking sector, providing consumers with a strong alternative to the big four. Newcastle Permanent and Greater Bank also merged last year to form the Newcastle Greater Mutual Group. However, he also sees parallels in his experiences as a farmer at Five Arrows to his vision for the merged Heritage-People’s Choice group. 

    “At the farm, I buy all my supplies from the local co-op where I’m a member. I do that with the confidence that if I’m actually paying too much for hay, I essentially get a refund when I get the dividend at the end of the year. There is a closed loop on the profit.” 

    “With Heritage and People’s Choice, we don’t have shareholders we have to pay a dividend to, so the customers get it all. It is the same closed loop. At the end of the day, we can take a long-term view because we don’t have quarterly forecasts or half-yearly profit targets and we don’t have dividends to pay each year. Although the members hold us to account, we don’t have to make short-term decisions solely about delivering results at an AGM. We’ve got the ability to take a long-term view of what the customers need and where we need to invest.” 

    The 63-year-old Cameron’s first job out of school was working as a trainee accountant for a mutual bank and now he wants to “reimagine the concept of mutuality” for a company that’s just started playing on a truly national stage in the midst of the cost of living crisis. 

    “I was always uncomfortable about the conflict in a large corporate between the customer and the shareholder,” he says. “It is difficult to get it right where you can both win at the same time. So, I’m a massive fan of the mutual model because you don’t have the conflict and everything you do is in the interests of the customer. As a result of the merger, we are at a scale that allows us to be competitive, but also a national organisation. So we’ve got the scale to be able to invest in technology, products and customer service, while being a purpose-driven company.” 

    Merger of equals 

    Together, Heritage and People’s Choice have been in existence for more than 200 years. Consequently, they lack the formal governance rules now commonplace for listed companies. Cameron and his newly merged board of directors are about to change that. 

    “We are stepping up the structure and the governance, which is particularly interesting to the members of the AICD,” he says. “We are picking up the ASX corporate governance guidelines and applying them to this new organisation, even though we are not required to do so.”

    The existing boards, which each had six directors, have initially combined into a board of 12, which will reduce to eight directors over the next four years. Unlike listed public company boards, a majority of the directors are elected by the members of the combined bank. 

    “When recruiting directors, we ensure they have the appropriate capability as directors,” he says. “That they have the skills, the knowledge of the sector, hopefully they are AICD members, that they’ve got a business degree, they’ve passed a fit-and-proper test, they go through a nomination process, they get approved by the board, and then they get put up for election. In my mind, they are probably the critical governance steps any ASX company would follow, but we’re applying those principles to a mutual or customer-owned bank and that is taking us onto a whole new platform.” 

    Cameron describes it as a true merger of equals. “In most mergers or takeovers, you have a dominant company and it takes the culture, the practices, the attitudes and the senior roles in the new organisation after the takeover analysis,” he says. “For the regulator, this deal has probably been quite different. It is the creation of a whole new organisation with new capital requirements and new risk management processes. In many cases in the past, they haven’t had this merger of equals to work through. The typical transaction... has been more of a takeover environment where the large company continues to do what it’s always done.” 

    Cameron says the merger deal will allow the new entity to lift its technology game — given that it doesn’t have the complexity and the legacy systems of the major banks — and offer pricing that is more competitive than the majors.

    Branches are now open on Saturday mornings and a 24/7, locally domiciled call centre is operational. The new entity will also provide $60m in grants to the community — including sporting clubs, not-for-profit health associations and other small groups that need help — during the next five years.

    Community Impact


    Customers across Australia




    People employed


    Increase in employment in 2021-22


    Of customer-owned bank staff live and work outside cities

    Source: COBA Banking with purpose - Stories from Australia’s customer-owned banking sector


    There will be no branch closures or redundancies below the executive levels, and dual head offices will be maintained in Adelaide and Toowoomba. Cameron notes that the change management process for staff under the new entity has been highly consultative. 

    “The employees are all customers and members as well,” he says. “So our customers trust our employees in the branches. When they come into a branch and ask a staff member, ‘Hey, I got something in the post the other day about the merger, what do you reckon I should do?’ Of course, the employees are saying, ‘This is fantastic, great for our people, great for customers and genuinely a really good thing because we are going to have better technology, lower fees, more products, more services and longer opening hours’.” 

    It’s about the customer 

    Cameron’s greatest fear for the year ahead is that amid all the opportunities, the group takes its eye off what is most important — delivering services to customers. “My concern is that the focus and enthusiasm that is there at the moment tapers off as we find something else that’s more important,” he says. “It’s my job to make sure that doesn’t happen.”

    As a result, he has instigated a checklist process for board and executive meetings. At the conclusion of each discussion, there is a stock-take on what a customer would say if they sat through the meeting — and how they would respond to the outcome. The commentary is documented. 

    “I would encourage other organisations and other members of the AICD to adopt that approach, to ask that question,” says Cameron. “We take it very seriously. If you think about the board and executive discussions you’ve had in your career, wouldn’t you always have liked to have had a customer sitting in the room listening to the discussion? For me, it’s a really good discipline.”

    Governance in turbulent times 

    Cameron was CFO at St George Bank for 18 months during the global financial crisis, so he has some real-life experience with which to reflect on the worldwide financial services industry turmoil so far in 2023. While he notes it was a “scary few weeks” when Credit Suisse teetered on the brink before being rescued by its Swiss banking rival UBS, following several regional bank collapses in America, he is optimistic about the outlook for the European and US economies. 

    “While there will still be some bumps in the road ahead, ultimately the economics of what is happening out there is going to be strong, and will surprise some on the upside,” he says. “Markets overreact to good and bad times, and as a result of that, you get an amplification of situations. You need to look long-term, stick to your knitting and not overreact to the day- to-day commentary and statistics out there.” 

    Given his resume as a former Suncorp boss and CBA executive, Cameron chooses his words carefully when asked about the merger of the former with ANZ, which has been challenged by the competition regulator. While he says such mergers open up opportunities for groups like Heritage- People’s Choice and could hasten further industry rationalisation involving the likes of Bendigo and Adelaide Bank, and Bank of Queensland, he isn’t sure that they deliver the best outcomes for customers. “Bigger is seen as better from a textbook perspective, but unless you can deliver the promise of putting the customer first, ultimately mergers are not a good thing.” 

    Cameron also believes the Australian banking system is well capitalised, governed and regulated, which means “we should not overreact” to events in America, where the financial regulation is more fragmented. 

    In the hot seat 

    In addition to his role at Heritage-People’s Choice, Cameron also chairs global property funds management company Resolution Capital and is deputy chair of iCare, the NSW work cover insurer which has been under some scrutiny after a media exposé of its culture and financial performance two years ago. Appointed deputy chair in 2020, Cameron is also chair of the audit committee and a member of the risk committee. He says he has brought to both the board table and his committee work valuable commercial experience, plus a knowledge of the workings of government and the political process. Since he took over, there has been a complete refresh of the board and senior management team. 

    “Now the organisation is seen in a positive light,” says Cameron. “Of course, we don’t always get it right and that is an ongoing challenge.” 

    Cameron stresses he is on the iCare board for a singular, higher purpose. “I think of myself as a person who can make a difference to New South Wales, providing a better outcome for people who have been injured at work,” he says. “If I can help improve the level of service and help people get back to work and out of hospital quickly, then I feel like I’ve actually done something good for the community. That is the only reason I’m there.” 

    In his chair and director roles, Cameron has lived by the golden rule that the board’s expectations of management must be clearly understood by the latter and that each has a “crystal clear understanding of where their roles start and stop”. 

    “One of the major roles of the chair is to be a coach to the CEO,” he says. “Not to do the CEO’s job, but to play an active role in helping the CEO form her or his views going forward, not to actually tell the CEO the answer to the question.” 

    One of his golden rules of board meetings is that every director shouldn’t feel the need to comment on every item. “I’ve tried to get everyone to put all of the controversial issues on the table and tease out alternative views,” he says. “It’s my job as chair to get to the end of the discussion with some sort of consensus view we can all buy into. That means discouraging some people from talking too much and encouraging the views of the quieter directors. It’s absolutely critical that we leave that room with a consensus — and we talk in support of each other and the decision.”

    Part of the fabric 

    Customer-owned banks have a long history in Australia, providing more than money to the communities in which they operate.

    Financial mutuals have been operating in Australia for more than 150 years. They fall into three categories — mutual banks, building societies and credit unions. Unlike investor-owned banks, the profits of customer- owned banks are not paid to shareholders, but are reinvested into improving products and services for customers and support programs for the community. 

    Australia’s customer-owned banks have combined assets of $160b, according to the Customer Owned Banking Association (COBA). “What sets customer-owned banks apart is their unique and in-depth understanding of their customers and the communities they serve,” says COBA CEO Michael Lawrence MAICD. 

    Mutuals are authorised deposit- taking institutions (ADIs) regulated by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001 (Cth), and by the Australian Prudential Regulation Authority (APRA) under the Banking Act 1959. Deposits in all ADIs of up to $250,000 per person were guaranteed by the federal government on a permanent basis from 1 February 2012.

    This article first appeared under the headline ‘The Feeling Is Mutual’ in the June 2023 issue of Company Director magazine. 

    Latest news

    This is of of your complimentary pieces of content

    This is exclusive content.

    You have reached your limit for guest contents. The content you are trying to access is exclusive for AICD members. Please become a member for unlimited access.