Members Equity Bank and the current market environment

Customers and staff have been inquiring about Members Equity Bank's (ME) position in the context of the current market environment.

ME is a licensed approved deposit taking institution. ME's depositors have the benefit of the rules and regulations imposed by the Australian Prudential Authority (APRA) on all licensed banks.

ME has strong liquidity (funding) for its business activities extending into 2008. We have liquidity policies and processes in place to ensure the long-term requirements of our customers are met. The company is well positioned following the successful SMHL Global Fund 2007-1 transaction in May for $3.2 billion, along with several committed funding arrangements with external counterparts.

Other than changing rates in line with official interest rate moves, ME does not foresee the need to alter interest rates on our products in the short term. The quality of ME's portfolio combined with our strong funding and liquidity processes ensure that ME will be able to continue to meet our ongoing needs without disruption.

At the commencement of the current market turbulence, ME was seeking to raise $500 million for the Maxis programme. The lack of market support for all funding transactions and ME's strong liquidity position meant we were able to defer this transaction.

ME has very prudent lending guidelines and only finances its own lending products - SMHL, Maxis, commercial loans and leases. All of these are well secured and additionally, ME does not offer non-conforming or low documentation products.

Whilst the current market turbulence is unsettling and has required a change in ME's funding arrangements, we are strongly positioned during this period.

Please contact your Business Development Manager or visit http://www.nteu.org.au/benefits/membersequity