Under the agreement, which is subject to approval of the Court, the Bank’s borrowers who are members of the class actions have admitted that their loans are valid and enforceable and have provided broad releases from future litigation.

The principal and ordinary accrued interest remains payable by borrowers. However, the Bank has agreed to waive unpaid interest relating to overdue amounts, being the interest (additional to ordinary interest) that is payable by borrowers in default, which is accrued and unpaid up to the date the Court approves the settlement.

This waiver will not result in any adjustment to the accounts of the Bank as unpaid interest relating to overdue amounts has not previously been recognised as revenue. Bendigo and Adelaide Bank Managing Director, Mike Hirst, said he was very pleased with the settlement.

“We have always maintained that the Bank’s conduct was at all times appropriate and the Bank is entitled to be repaid its loans to Great Southern borrowers.

“The terms of this agreement endorse this position and we look forward to working with the borrowers as they repay their debts to us,” Mr Hirst said. Borrowers can contact the Bank on 1300 677 885 to discuss the repayment of loans.

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The milestone was almost unimaginable when the Community Bank® model was first launched in 1998, in partnership with the people from the small Victorian wheat farming towns of Rupanyup and Minyip.

Managing Director Mike Hirst said for these communities the Community Bank® model was seen as a way to restore branch banking services to the towns, after the last of the major banks closed down their services.

“Between 1993 and 2000, more than 2050 bank branches closed across Australia representing a 29 per cent reduction in branch numbers,” he said.

“Bendigo Bank recognised the impact of these cuts on communities and decided to create a new franchise banking model which saw the Bank partner with communities and share the revenue generated by the branch.

“This allowed Australian communities to retain revenue generated by their banking business in their local community for the first time and enabled them to reinvest the money into community groups and projects,” Mr Hirst said.

From 2001 to 2011, Community Bank® branches have represented a quarter of all new Australian bank branches (205 of 799) and in 2009/10 Community Bank® branch openings made up more than half of the new bank branches opened that year (22 of the 40 branches).

“Demand from communities remains strong and in the past financial year 20 new Community Bank® branches have opened and there are currently another 32 Community Bank® sites in development, with many more conversations happening with communities Australia wide,” he said.

“But the Community Bank® model is about far more than enhancing a community’s access to banking services, it’s now about securing an alternative source of income so that a community can fund activities or initiatives which make their town or suburb a better place to live.”

In the past 14 years the Community Bank® network’s returns to communities has grown exponentially each year, with $470,000 returned in the first five years, $8.15 million in the first eight and $22.58 million by the end of the first decade of operation.

Today, just four years later, that figure is an astonishing $80 million and with the continued growth and popularity of the Community Bank® model returns should top $100 million by the end of 2013.

Mr Hirst said in a growing number of instances, community funds were being augmented by governments.

“Communities that can demonstrate commitment and buy-in to projects are great partners for government and these dollars add up to new community facilities, improved services, more opportunities for community engagement activities and generally speaking, a more prosperous society.

“Those who support a Community Bank® branch know they are part of something special, a unique banking movement which has evolved into a whole new way of thinking about banking and the role it plays in modern society,” he said.

3 July 2012

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