Overview

The Consent to sale or disposal of business of an ADI, issued in 2021, is an instrument under the Banking Act 1959 that grants permission for Firefighters & Affiliate Credit Co-operative Limited to proceed with the sale or disposal of its business to another authorised deposit-taking institution, Teachers Mutual Bank Limited. This consent was issued by Lara Douglas, a delegate of the Treasurer, in accordance with subsection 63(1) of the Act. The primary purpose of this Act is to ensure that any sale, disposal, or restructuring of an authorised deposit-taking institution’s business is done with the national interest in mind and in compliance with the statutory requirements. This is particularly important to safeguard the financial stability and integrity of the banking sector. The enactment of the Banking Act 1959 by the Parliament of Australia was intended to address the need for stringent regulation and oversight of banking activities to protect depositors and maintain the stability of the financial system. By requiring the Treasurer’s consent for significant transactions such as the sale or disposal of business by an authorised deposit-taking institution, the Act ensures that such actions are scrutinised to prevent any adverse impact on the economy and financial system. The policy objective is to maintain public confidence in the banking sector while allowing for necessary restructuring and consolidation within the industry.

Scope and Application

The Consent to sale or disposal of business of an ADI under the Banking Act 1959 applies to the Firefighters & Affiliate Credit Co-operative Limited, an authorised deposit-taking institution (ADI) that is not a foreign ADI, and its proposed arrangement or agreement for the sale or disposal of its business to another ADI, Teachers Mutual Bank Limited. The consent provided by the delegate of the Treasurer, Lara Douglas, is necessary under subsection 63(1) of the Act for the arrangement or agreement to be valid, particularly given the consideration of the national interest. This legislation has a jurisdictional reach within Australia, applying specifically to authorised deposit-taking institutions that are not foreign ADIs. The consent process ensures that any sale or disposal of business by an ADI must be approved by the Treasurer, with the authority potentially delegated to APRA, an APRA member, or an APRA staff member under paragraph 63(5)(a) of the Act. Any sale or disposal carried out without the Treasurer’s prior written consent is void, and the offence carries a maximum penalty of 200 penalty units as stipulated in subsection 63(1) of the Act.

Key Provisions

The Banking Act 1959 (the Act) contains provisions that govern the sale or disposal of the business of Authorised Deposit-taking Institutions (ADI) in Australia. Specifically, section 63 of the Act requires that any ADI, other than a foreign ADI, must obtain the prior written consent of the Treasurer before entering into an arrangement or agreement for the sale or disposal of its business, or for carrying on business in partnership with another ADI, or effecting a reconstruction of the ADI. The consent of the Treasurer is granted in this case for Firefighters & Affiliate Credit Co-operative Limited, an ADI, to enter into an arrangement or agreement for the sale or disposal of its business to Teachers Mutual Bank Limited, another ADI. The obligations imposed on the parties governed by this Act include the requirement to obtain the prior written consent of the Treasurer before entering into any arrangement or agreement for the sale or disposal of the business of an ADI. This obligation applies to all ADIs, except for foreign ADIs. The Treasurer, in this case, is represented by Lara Douglas, a delegate of the Treasurer, who has granted the consent to the arrangement or agreement between Firefighters & Affiliate Credit Co-operative Limited and Teachers Mutual Bank Limited. Failure to obtain the prior written consent of the Treasurer before entering into any arrangement or agreement for the sale or disposal of the business of an ADI, or carrying on business in partnership with another ADI, or effecting a reconstruction of the ADI, is an offence under subsection 63(1) of the Act. The maximum penalty for this offence is 200 penalty units. Furthermore, any arrangement, agreement or reconstruction and any such sale or disposal in pursuance of any such arrangement or agreement, entered into without the prior consent of the Treasurer is void and of no effect. The Treasurer must not unreasonably withhold consent. These provisions are intended to ensure the stability of the financial system and protect the interests of depositors and other stakeholders.