AMP Chief Executive Francesco De Ferrari said the internal combination reflected AMP’s client-led strategy, and followed the decision by Sally Bruce to step down as AMP Bank CEO.

The AMP Australia business will be led by Alex Wade, currently CEO of Australian Wealth Management. Rod Finch, currently Managing Director, Wealth Products and Platforms, has been appointed to take the role of Managing Director, AMP Bank, reporting to Mr Wade, when Ms Bruce steps down on 1 November 2019.

Francesco De Ferrari commented: “The strategy we set out in August is focused on reinventing AMP to be a client-led, simpler and more growth-oriented business. Bringing together our bank and wealth management teams in Australia will drive a more integrated organisation better able to pursue the significant opportunity we see in providing more holistic wealth services for our clients. Closer integration of the businesses was part of our long-term plan, and with Sally’s decision to step down we have been able to accelerate our internal reorganisation.

“Sally has been an outstanding leader for AMP Bank, delivering double-digit earnings growth, through consistent growth in revenue and client numbers, as well as creating a strong and inclusive culture within the bank. She has led the business for just over four years and has decided it is time to transition. I want to thank Sally for her contribution, and particularly for her support to me over the past ten months.”

Sally Bruce said: “I am extremely proud of my time with AMP and what we have delivered at AMP Bank since I joined in 2015. Now is the right time for me to step down and to join my family, who relocated back to Melbourne earlier this year.

“I’m confident I am leaving AMP Bank in the hands of a strong team who will continue to drive the success of the business under AMP’s new strategy.”

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Sally Bruce

AMP Bank has recorded a 14 per cent increase in the number of existing home loan customers switching from interest-only to principal and interest loans since the first round of rate cuts in June.

Analysis of customer data has revealed more existing interest-only customers are choosing to pay down their debt as interest rates have decreased, switching from interest-only loans ahead of their five-year expiry date.

If a homeowner with an average 30-year $400,000 home loan (first five years interest-only and remaining 25 years principal and interest) were to switch to paying principal and interest two years earlier, it would initially cost an extra $517 per month. However, they would save $14,711 over the life of their loan as a result of starting to pay down their debt earlier.

AMP Bank Chief Executive Sally Bruce said: “The recent rate cuts have put more money in the pockets of homeowners, and we are seeing a significant uptick in the number of those customers opting to pay down their debt with the extra funds that they have.

“Whilst interest rates are at record lows there is no better time to pay down debt to own your home or investment property sooner. Homeowners are sometimes unaware of how powerful extra repayments can be – those who are able to increase their repayments now will pay less interest over the life of their loans.”

Average interest-only home loan rates are currently 50 basis points higher than principal and interest rates for owner-occupiers, according to the latest Reserve Bank of Australia lending rates data for June.

Ms Bruce said: “Switching to principal and interest will cost homeowners more in the short term, but over time the customer could save thousands of dollars in interest as a result of paying off their debt sooner.

“These decisions always come down to a customer’s personal circumstances and capacity in their budget, but if their situation allows it, the short-term pain may be worth the long-term gain.”

Additional calculations

If a homeowner with a 30-year $700,000 home loan (first five years interest-only and remaining 25 years principal and interest) were to switch to paying principal and interest two years earlier, it would initially cost an extra $904 per month. However, over the life of their loan, they would save $25,7441 as a result of starting to pay down their debt earlier.

If a homeowner with a 30-year $1,000,000 home loan (first five years interest-only and remaining 25 years principal and interest) were to switch to paying principal and interest two years earlier, it would initially cost an extra $1,291 per month. However, over the life of their loan, they would save $36,777 as a result of starting to pay down their debt earlier.

——

The above calculations are based on RBA lending rates data for June 2019 – securitised housing loans, average outstanding variable rate owner-occupier principal and interest: 4.04% p.a. and securitised housing loans, average outstanding variable rate owner-occupier interest only: 4.54% p.a.  The calculation is a model only and does not account for future variations in interest rates or include fees.

AMP Bank compared customer movements six weeks prior to the first RBA rate cut in June and six weeks after.

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Sally Bruce

AMP Bank has announced a number of highly-competitive offers for customers, cementing its position as a non-major bank of choice for Australian savers and home buyers.

AMP Bank has launched a new, highly-competitive savings rate for the AMP Saver Account, including a 3% p.a. four-month introductory rate for new customers on balances of up to $250k and a very strong ongoing rate of 2.1% p.a. on all balances.

The Bank is also making ATM access free for all its customers, across any ATM in Australia, via a fee rebate, which means that if customers are charged a fee by an ATM operator, AMP Bank will automatically credit their account with the amount of the fee after the transaction.

Sally Bruce, CEO AMP Bank, said the competitive offers demonstrate AMP’s commitment to put customers first.

“AMP Bank has a 21-year history of supporting customers save for big life moments such as their first home, to start a family or take that once-in-a-lifetime holiday.

“We know it’s getting harder to save given interest rates are low, so today we’re offering customers not only a great introductory savings rate, but a highly-competitive ongoing rate to help our customers reach their savings goals faster.

“What we have announced today is extremely competitive for customers and positions AMP Bank strongly in market,” said Ms Bruce.

Ms Bruce added: “Supporting our customers reach their financial goals has also driven our decision to offer a rebate for ATM fees – no matter which ATM they use across Australia – making every single ATM in Australia accessible and free for AMP bank customers.

“There are no hidden conditions, with no deposit or minimum number of transactions attached to the rebate. From 1 June 2019, if a customer is charged a fee at an ATM, we will rebate the full amount of that fee into their account. We are extremely proud to support our customers in this way,” Ms Bruce said.

AMP Saver is an award-winning account, having been recently awarded Mozo’s Kick Start Savings and No Strings Savings and a 5-star rating from Canstar for Outstanding Value for Flexible Savers.

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Mrs Smith has more than 30 years-experience in financial services and will join AMP from Bank of Queensland where she is currently General Manager BOQ Broker.

Mrs Smith started her career in New Zealand where she ran Sovereign Home Loans, managing the adviser and broker network. In Australia, she has been the Regional General Manager for the Commonwealth Bank in Adelaide, responsible for 75 branches, before moving to lead the Commonwealth Bank’s third-party channel relationships in NSW and ACT.

AMP Bank Group Executive Sally Bruce said Mrs Smith would be an important contributor to the next stage of the bank’s growth. “Enhancing and building our intermediated sales approach is critical for AMP Bank and our ambition to double our contribution to AMP over the next five years.

“Adrienne’s extensive experience managing third parties with a focus on driving the customer experience reflects her passion for the important role of advisers and brokers.

“We are delighted to welcome her to the team and to this newly-created role.” Mrs Smith will join AMP in April.

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Sally Bruce

AMP’s new three-in-one account Bett3r has been awarded Best Savings Account by finder, recognising its competitive savings rate.

The one of its kind Bett3r includes three linked accounts – Pay, Save and Spend – designed to help customers take control of their finances and reward savings. Its savings account offers a rate of up to 3 per cent* per annum, one of the best no-lock-in savings deals on the market.

Sally Bruce, AMP Bank’s Group Executive said: “As a wealth management bank our aim is to help our customers achieve their goals, including helping them own their home sooner.”

“We know the foundation to achieve these goals is day-to-day cashflow management, a challenge for many of us in our busy lives.

“This was the basis from which we developed Bett3r – a three-in-one account which intuitively manages our customers’ income, spending and savings.

“The three linked accounts work together to provide an accurate view of income, bills, progress on savings goals and spending priorities, through a simple mobile app.

“The competitive rate is an incentive for our customers to save for their goals,” said Ms Bruce.

Earlier this year Bett3r won Mozo’s Experts Choice Innovation Award recognising its unique, built-in budgeting capabilities and the account received a 5-star rating from Canstar.

The Bett3r Account integrates seamlessly with AMP’s mobile wealth management tool My AMP, which provides customers with a holistic view of their wealth, including super, insurance, investments and banking.

Note: The standard rate is 1.5%pa with a 1.5%pa bonus for up to $100,000 if at least $2,000 is deposited into Bett3r’s Pay account each month.

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Sally Bruce

Australia’s most recognised regional banks have called on a major competition inquiry to level the playing field and put consumers and the economy first.

In a joint submission lodged with the Productivity Commission, AMP Bank, Bank of Queensland, Bendigo and Adelaide Bank, ME Bank and Suncorp highlighted five key areas that require policy reform to achieve sustainable competition and competitive neutrality:

1. Further policy reform to reduce the artificial funding cost advantages enjoyed by the major banks. While the new Major Bank Levy has reduced this advantage, it only recoups a small proportion of the overall credit rating uplift enjoyed by the majors;
2. Further reform of risk weights to address the significant gap that still exists between the capital requirements of the major banks and standardised banks. While there has been some risk weight narrowing following the FSI, the gap remains significant, and is particularly stark for loans with the lowest risk;
3. A review of macro-prudential rules to better balance macro outcomes such as stability, without undermining banking competition. One option would be for APRA to give greater policy weight to minimum capital requirements. Macroprudential rules set by APRA have effectively ‘locked-in’ market share of loan books at current levels, thus leaving smaller banks with no room to challenge the already dominant position of major banks;
4. Mortgage aggregators and brokers owned by major banks should publicly report on the proportion of loans they direct to their owners. While we do not suggest that major banks should be banned from owning broker networks, we do believe that where this occurs it should be managed in an open and transparent way to ensure customers are able to make fully informed decisions; and
5. Before any new regulations are introduced, greater consideration should be given to the impacts on smaller banks. The unprecedented pace and volume of new regulation and compliance has a disproportionate impact on smaller banks which stifles sustainable competition.

The banks also support the ABA’s submission calling for more care and attention into the shadow banking sector, which continues to compete free of many regulations and APRA oversight.

The CEOs said while Australia had been well served by a strong and highly regulated banking sector, it was important that stability did not overshadow competition and good consumer outcomes.

Suncorp Banking & Wealth CEO David Carter said: “We believe there can be a balanced and fair framework allowing banks of all sizes to compete on a level playing field, while still meeting all sound, prudential principles. We would like to see more attention on macro-prudential rules to promote customer choice and competitive pricing, as opposed to maintaining the status quo – which is in effect similar to the ‘yellow flag’ being waved at the Grand Prix, where all drivers are then prohibited from overtaking one another.”

ME CEO Jamie McPhee said: “Regulatory imbalances have allowed a small group of banks to dominate the Australian market. Reform is needed if we want to create a fairer banking system so smaller banks can compete. A more competitive banking system is about improving customer choice and promoting economic growth.”

AMP Bank Group Executive Sally Bruce said: “Access to cheaper funding plus lower capital requirements for like-for-like loans gives the big banks a huge advantage over smaller players. Combined with the blanket approach to compliance and macro-prudential limits, we have a system of issues which impede competition and the best outcomes for customers. We are at risk of keeping big banks big and small banks small unless we address.”

The CEOs said improving competitive neutrality will deliver better customer outcomes and drive greater innovation in the sector.

“A strong banking system is good for all Australians and smaller banks bring vital competition and choice to the market,” they said.

“While the market is competitive today, it is vital this competition is fair, productive and sustainable.

“The bottom-line test must be: what is good for customers is good for the economy.”

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Sally Bruce

AMP has announced changes to investor lending to manage its portfolio responsibly and align with regulatory requirements.

The pricing and policy changes for investment property loans, include:

• Variable interest rates for new and existing investment property loans will increase by 35 basis points.
• For all new investor property loans, the maximum loan-to-value ratio (LVR) is reducing to 50%. This change applies to all new loans with an investment property as security and includes loans to SMSFs.

The changes to interest rates are effective 23 June 2017 for new customers and from 26 June 2017 for existing customers. LVR change is from 21 June for new investment property loans and 1 July for SMSF investor loans.

Sally Bruce, Group Executive AMP Bank commented: “These measures are needed to ensure we operate within our regulatory obligations.

“We’re committed to managing our portfolio responsibly while balancing this with the interests of our customers.

“We are managing our loan book in a very active market and these changes follow recent shifts in competitor activity. We will continue to take the necessary steps for sound management of our regulatory requirements,” she said.

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AMP Chief Executive Craig Meller said the new group structure delivers sharper  focus on performance in the core Australian businesses, drives efficiency  across the group and provides increased emphasis on the growth drivers in the portfolio.

The key changes to the group leadership team are:

• Wealth Solutions and Customer: Paul Sainsbury will lead a new division bringing together customer, wealth  management and product solutions.
• Advice and New Zealand: Jack Regan, currently Managing Director New Zealand, will lead an expanded  portfolio, assuming responsibility for AMP’s advice businesses. Mr Regan will retain responsibility for the  management of AMP New Zealand.
• AMP Bank: Sally Bruce will join the  group leadership team as Group Executive, AMP Bank.
• Insurance: Megan Beer will be appointed Group Executive, Insurance, bringing single point accountability to the stabilisation and management of the insurance business.
• Technology and Operations: Craig Ryman will become Group Executive, Technology and Operations, assuming an expanded portfolio combining IT and operations.
• Enterprise Risk Management: Saskia Goedhart, Chief Risk Officer, will join the group leadership team.

The leadership changes are effective 1 January 2017.  Management of the other divisions remain  unchanged.  An updated structure chart and biographies are attached.

As a  result of the changes, three executives will leave the organisation: Pauline Blight-Johnston, Group Executive, Insurance, Super and Risk Management; Rob Caprioli, Group Executive, Advice and Banking; and Wendy Thorpe, Group Executive Operations. Ms Thorpe had previously advised her intent to retire and will leave the business in early  2017 after helping to ensure the smooth transition of the operations  function.  Ms Thorpe will also shortly  join the board of AMP Bank as a Non-Executive Director.

“I would like to thank those  executives who are leaving the organisation for their contribution to AMP and  to the transformation of our core Australian business during the past three  years.  I wish each of them well for the future,” said Mr Meller.

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Ms Bruce will have overall responsibility for all areas of AMP Bank, including its range of savings and transaction accounts, home loan products, strategy, marketing and distribution.

Ms Bruce joins AMP from National Australia Bank where she was most recently CFO Business and Personal Banking.

Mr Caprioli said: “Sally’s extensive knowledge of retail banking and expertise across financial services makes her an ideal choice to lead AMP Bank.

“AMP Bank is an important part of AMP’s overall offer and a key contributor to our customer focused strategy. Sally’s experience and track record in consumer finance will be invaluable in continuing this momentum.”

Ms Bruce was appointed following an extensive search. Her appointment is effective 31 August, 2015.

Ms Bruce will succeed Michael Lawrence as Managing Director, following a decision by Mr Lawrence at the beginning of this year to leave the business.

“Michael has been instrumental in building AMP Bank into an important contributor to the overall AMP business. I’d like to thank him for his outstanding leadership and his enormous contribution to the bank’s ongoing success”, Mr Caprioli said.

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