Mutual bank, credit union wrap up merger

Teachers Mutual Bank Limited (TMBL) has announced the completion of the legal transfer to formalise its merger with Pulse Credit Union Limited (PCUL).

The final step of data migration will occur this week across 5 and 6 November 2021.

The finalisation of the merger has come after an overwhelming majority of PCUL members supported the proposed deal with TMBL.

The Australian Prudential Regulation Authority (APRA) gave its initial approval for the joining of the two lenders in August after it received the green light from both company boards in July.

Moving forward, 6,000 PCUL members who voted in favour of the proposed merger (98 per cent) are now part of either Health Professionals Bank or UniBank (both are divisions of TMBL).

Furthermore, the deal would see the credit union’s $122 million in assets join together with TMBL’s base of over 220,000 members and more than $9.75 billion in assets.

In a letter previously issued to Pulse members, the credit union’s chair Neil McDonald stated that the board believed it to be the “best and most appropriate strategy for Pulse to secure a successful and sustainable future in a very challenging and rapidly changing financial services environment”.

According to TMBL, the transition would be a “natural fit” as PCUL traditionally provided banking services to essential workers in the healthcare industry such as nurses, midwives, doctors, and hospital staff.

TMBL and PCUL had explored the deal since January this year, with Pulse citing commercial and technological challenges as its chief drivers.

Previous mergers with La Trobe University Credit Union and Melbourne University Credit Union allowed Pulse Credit Union Limited to extend the provision of banking services to members in the tertiary education sector, creating an additional alignment to UniBank.

All of the new Health Professionals Bank and UniBank members have access to products and services such as a mobile banking app, unlimited ATM withdrawals, the new payments platform, and the opportunity to apply for credit cards.

In addition, new members would also have the opportunity to access socially responsible mortgage and deposit products, according to TMBL, which added that any retail mortgage or deposit product opened at TMBL is a certified responsible investment by the Responsible Investment Association Australasia, at no additional cost.

Commenting on the completion of the merger, TMBL chief executive Steve James said: “We are delighted to be completing our merger with Pulse Credit Union Limited and growing the number of healthcare and tertiary education members we serve in Victoria.

“While the Australian economy has remained fairly stable throughout the waves of the COVID-19 pandemic, the low-rate environment and push for digital offerings has put increased pressure on some of the smaller credit unions.

“As we draw closer to the end of 2021, our board of directors are optimistic about future merger opportunities with like-minded mutuals.

“At Teachers Mutual Bank Limited, our purpose is to provide good banking, for those who do good and we are so proud to serve over 220,000 members across Australia working in the essential niches of education, emergency services and healthcare.”

However, TMBL head of industry partnerships Jim O'Connell told Mortgage Business that TMBL is not currently in discussions with other mutual banks about future mergers.

Speaking about the merger with PCUL, Mr O'Connell said: “Preliminary merger discussions with Pulse Credit Union Limited indicated that we shared a dedication to providing high-quality, personalised member experiences.

“As we worked through the due-diligence process, the connection between our two mutuals went from strength to strength, despite the challenges brought by the Delta variant of the COVID-19 pandemic. Completing an interstate merger while borders are closed is not an easy task, but our teams demonstrated passion throughout the entire process and it’s fantastic to have 6,000 new members to serve.”

Mutual mergers abound

Mr O'Connell acknowledged that there is ongoing consolidation in the mutual banking sector, noting that some of the largest mutual banks have recently signalled their intentions to merge.

Indeed, the latest merger represents the second for TMBL this year, after the consolidation of its Firefighters Mutual Bank brand and Firefighters Credit Co-operative in May.

There have also been various other mutual mergers at play, with Newcastle Permanent and Greater Bank exploring options to merge with Greater Bank, with the two banks undertaking a due diligence process. The merger would create a bank with $19.8 billion in total assets and around 600,000 customers.

Newcastle Permanent chair Jeff Eather said he believes more mergers would follow, as smaller banks seek scale to manage the costs of technology and fight for relevance.

Meanwhile, Heritage Bank and People’s Choice Credit Union are also in the process of completing due diligence for a proposed merger, with a member vote due early in 2022.

Commenting on this trend, Mr O’Connell told Mortgage Business: “I think that we will continue to see this trend play out across the mutual sector, as some of the smaller credit unions continue to face growing commercial and technological challenges in an era of digital disruption, reducing margins, increasing regulatory change, and the challenges resulting from COVID-19.”

[Related: Bank completes merger with credit union]