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Greater Bank and Newcastle Permanent merger gets go-ahead

Two mutual banks based in the Hunter Region of NSW are set to consolidate after the corporate deals were approved.

On Friday (23 September) federal Treasurer Jim Chalmers announced the approval of Greater Bank and Newcastle Permanent Building Society to merge, as well as Heritage Bank and People’s Choice Credit Union, after the Australian Prudential Regulation Authority signed off.

The deal would see the two combined have a total asset portfolio of $19.9 billion and 1,600 staff and boast over 600,000 customers forming “one of Australia’s largest customer-owned financial institutions”.

With both banks operating side by side in the region “competing for customers” for more than 75 years, the move will create a “financially stronger” lender able to compete against the bigger players.

“Combining our resources and financial strengths provides an unparalleled opportunity to grow and innovate, to deliver even better value for our customers,” Greater Bank said.

“Merging will also enable us to keep pace with increasing regulation and reporting, and the rapid advancements in banking technology, both of which require significant investment.

As smaller financial institutions unite to remain competitive and sustainable in the growing competitive landscape, Greater Bank chairman Wayne Russell said combining will provide an “unparalleled opportunity to grow and innovate”.

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“This has been, and remains, the foundation for entering into such an arrangement,” Mr Russel said.

“Merging will also enable us to keep pace with increasing regulation and reporting, and the rapid advancements in banking technology, both of which require significant investment.”

The banks’ mutual ownership structures will be maintained following the merger and customers will have the opportunity to vote on the proposals as part of their annual general meetings.

The announcement follows an “extensive due diligence” process after a memorandum of understanding was released in August 2021, Mr Russell said.

“The process has confirmed our initial view that this is the right time to bring together our two organisations, which in their own right offer exceptional financial strength built on years of solid performance,” Mr Russel said.

Chair of Newcastle Permanent Jeff Eather added the bank remains “fiercely committed” to being customer-owned and continuing to “invest profits for the benefit of our customers and the communities we serve”.

Mutuals consolidate

It comes following a spout of consolidation within the Australian banking industry over the past decade, which has seen the number of mutuals almost halved to around 70.

In approving the deals, Mr Chalmers said it was expected “to support competition and innovation in the banking sector” by allowing these customer‑owned banks to “better compete with the larger players”.

This decision follows advice provided by Treasury and financial regulators, including the Australian Prudential Regulation Authority (APRA) and the Australian Competition and Consumer Commission (ACCC).

The approvals come under the Financial Sector (Shareholdings) Act 1998, the Financial Sector (Transfer and Restructure) Act 1999, and the Banking Act 1959.

[Related: 2 community bank merger proposals approved]

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