Community Banks slowly losing money

The 238 Bendigo and Adelaide Bank community bank franchises produced an aggregate profit of $20 million in 2008. As has been reported before, the trading position of some community bank franchises is consistently poor.

According to the Australian 14 of the franchised community banks had negative equity. Another 32 had “poor working capital” and relied on working capital loans from Bendigo Bank. The study put loans from the bank to franchisees at $10 million at June 2008.

The newspaper’s contact’s study showed that more than 100 community banks opened before 2006 had lost “a good portion of their equity raised”, though more than three quarters of these were profitable in 2008. Another 40 that opened between 2006 and 2008 made a loss, The Australian reported, though some had only opened in the last year.

Source: The Sheet/The Australian