APRA has given its initial approval for the joining of the two lenders, after it was ticked off by both companies’ boards in July.
Pulse will now proceed with a special general meeting on 7 September, where it will be down to its members to decide on the amalgamation going ahead.
The deal, which would marry the credit union’s 6,000 members and $122 million in assets with Teachers Mutual’s 210,000 members and $9 billion in assets, can only proceed if 75 per cent of Pulse members vote in support of it.
If three-quarters or more members vote yes, the merger is expected to wrap up around 1 November.
Pulse’s board has unanimously supported the deal and pushed it to members, recommending it as the “best and most appropriate strategy”.
It would also follow Teachers Mutual brand Firefighters Mutual Bank wrapping its merger with Firefighters Credit Co-operative in May.
Jim O’Connell, general manager of Firefighters Credit Co-operative and project owner for the Pulse and Teachers Mutual merger told Mortgage Business that his group has sought partnerships with credit unions where the memberships aligns with the brands in its stable.
There are four brands under the Teachers Mutual umbrella: Teachers Mutual Bank, Firefighters Mutual Bank, Health Professionals and UniBank.
Under the deal, Pulse’s members in the Victorian health sector would be able to access Teachers Mutual services through the Health Professionals Bank division, while members working in the tertiary education sector would access Teacher Mutual’s services through the UniBank brand.
Pulse gained members in tertiary education after it completed a merger with La Trobe University Credit Union and Melbourne University Credit Union in 2011.
Mr O’Connell added that with Pulse holding members across the health and education sectors, there was a strong opportunity for the two organisations.
“There is a fair bit of consolidation happening in the mutual banking space and a lot of it comes out of the additional regulatory pressures, but also, some of the smaller credit unions wanting to be able to provide better services to their members,” Mr O’Connell noted.
“That has been happening in the last probably five or six years.”
Further, there could be opportunities for brokers.
“Particularly from the perspective of the broker network, it will give the TMBL accredited brokers some more opportunity to be able to work with people who are traditionally within the Pulse membership,” Mr O’Connell said.
In January, Pulse entered a memorandum of understanding with Teachers Mutual, under the Health Professionals Bank and UniBank brands, to explore the advantages of combining forces.
Pulse had cited commercial and technological challenges in a rapidly changing industry as its primary motivators, with the merger expected to boost its scale, financial resources, product offerings and service focus.
Meanwhile, Teachers Mutual has nine branches, mostly across NSW, in addition to centres in Melbourne, Brisbane, Perth and Canberra.
Teacher Mutual Bank Limited chief executive Steve James said the Pulse merger will give his company a growth opportunity, with the addition of members from Victoria.
The deal is not expected to impact the composition of the Teachers Mutual board.
Mergers and acquisitions in banking
The deal is progressing amid a wave of mergers and acquisitions from other banks, the most recent being NAB’s purchase of Citi’s Australian consumer banking arm.
The big four bank had also bought neobank 86 400 earlier in the year, combining it with digital bank subsidiary UBank.
Further, fellow mutuals Greater Bank and Newcastle Permanent flagged their intentions to explore a merger last week. The combined entity would have $19.8 billion in total assets and 600,000 customers.
Greater Bank CEO Scott Morgan said the future viability of mutual banks is under threat given the growing cost of technological investments, suggesting that only players with scale and large financial buffers will be sustainable.
The mutuals sector was warned by APRA in December that it may need to prepare for mergers, should banks face severe financial stress.
Bank of Queensland also wrapped its merger with ME Bank last month, although BOQ CEO George Frazis has argued against allowing any more consolidation with the big four banks.
[Related: Latitude to acquire non-bank lender]
Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth for InvestorDaily and ifa.