RACQ Bank insulated from parent group stress after insurance unit sale

There are also no intra-group deposits or loans between RACQ Bank and the RACQ Group.

The Royal Automobile Club of Queensland’s (RACQ Group) consolidated credit profile is weaker following its sale of RACQ Insurance, but its banking arm should be insulated from any stress scenarios from the group.

“[In] our base-case scenario, we do not foresee any stress at RACQ Group over the next 12-24 months that could materially affect the bank's creditworthiness,” S&P said in a statement on 1 September 2025.

RACQ Bank’s financial performance, core banking technology, and funding arrangements are largely independent and separate from the group, the ratings agency said.

There are also no intra-group deposits or loans between RACQ Bank and the RACQ Group.

The Australian Prudential Regulation Authority (APRA) also serves as a line of defence.

“As a fully regulated financial institution, we believe Australian Prudential Regulation Authority (APRA) has sufficient power to ring-fence RACQ Bank's critical services in the event of a credit stress at its parent. APRA also restricts the bank's ability to upstream resources to support related entities. Furthermore, the bank is also subject to minimum prudential capital and liquidity ratios,” said S&P Global Ratings.

However, the bank is vulnerable to competitive pressure in Australia's highly commoditized retail banking market.

“That said, we believe the stand-alone credit fundamentals of the RACQ Bank remain broadly in line with most other Australian mutual bank peers,” said S&P.