Chapter 3
Non-bank Financial
Institutions (NBFIs)
Chapter Organisation (cont.)
3.7 Permanent Building Societies
3.8 Credit Cooperatives
3.9 Managed Funds
3.10 Export Finance and Insurance
Corporation
3.11 Summary
3.7 Permanent Building Societies
(PBS)
• Industry structure
– During regulation PBS gained market share at the
expense of savings banks
– Have had difficulty competing since deregulation
of the financial sector
– Many PBS have merged and some have become
banks.
– Sector share of total assets only 0.6%
3.7 Permanent Building Societies (PBS)
(cont.)
• Sources of funds
– Mainly deposits from household sector
• Uses of funds
– Mainly owner-occupier housing finance
– Commercial loans
• Regulation
– As authorised deposit-taking institutions (ADIs)
regulation is the same as banks
Chapter Organisation (cont.)
3.7 Permanent Building Societies
3.8 Credit Cooperatives
3.9 Managed Funds
3.10 Export Finance and Insurance
Corporation
3.11 Summary
3.8 Credit Cooperatives
• Also known as credit unions
• Common bond of association often exists
between members due to employment,
industry or community
• Sources of funds
• Mainly deposits from members (payroll deductions)
• Also issuance of promissory notes
3.8 Credit Cooperatives (cont.)
• Uses of funds (Jan 2012)
– Primarily personal finance to members
• Residential housing loans (52%)
• Personal loans and credit card facilities (24%)
– Liquid assets including cash, bank deposits and govt.
securities (20%)
– Sector share of total assets 1.25%
• Regulation – as an ADI, same as banks
Chapter Organisation (cont.)
3.7 Permanent Building Societies
3.8 Credit Cooperatives
3.9 Managed Funds
3.10 Export Finance and Insurance
Corporation
3.11 Summary
3.9 Managed Funds
• Also Known as Mutual Fund
• Provide direct access to wholesale investment
markets for pooled savings of individuals (not
an intermediary)
– Investors in the fund obtain a right to the assets of the fund and a
share of the income and capital gains (losses) derived from those
assets
• Managed Investments Act requires
– Responsible entity (trustee and manager)
– Trust deed
3.9 Managed Funds (cont.)
• Sources of funds
– Statutory funds of life offices
– Superannuation and approved deposit funds
– Cash management trusts
– Common funds
– Public unit trusts
– Friendly societies
Chapter Organisation (cont.)
3.7 Permanent Building Societies
3.8 Credit Cooperatives
3.9 Managed Funds
3.10 Export Finance and Insurance
Corporation
3.11 Summary
3.10 Export Finance and Insurance
Corporation (EFIC)
• EFIC is the official export credit agency
• It encourages export trade through the
provision of trade insurance, and financial
services and products
3.10 Export Finance and Insurance
Corporation (EFIC) (cont.)
• Examples include
– Risk of non-payment
– Exposure to political risk
– Guarantee of trade finance