Shareholders of both Queensland-based Heritage Bank and Adelaide-based People’s Choice Credit Union have provisionally voted yes to a proposed merger of the two entities, the two lenders have announced.
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The provisional results from joint AGMs held on Wednesday (16 November) afternoon indicated "a clear approval for the merger", with both organisations highlighting they needed to have at least 75 per cent of voting members in favour of the proposal for it to be approved.
The outcomes are currently being validated and confirmed, and the results will be announced within the coming days, the lenders stated.
Together, this ‘blend’ of mutuals will create a national member-owned banking organisation with 720,000 members, 1,900 employees, $23 billion in assets, and 95 branches across South Australia, Victoria, NSW, Queensland and the Northern Territory, they explained.
The merged organisation will operate dual head offices in Adelaide and Toowoomba and both organisations have “committed to no non-executive redundancies” as a result of the merger.
There would be no closures of the existing branches as a result of the proposed merger, according to the lenders.
Heritage CEO, Peter Lock said: “This is a milestone moment for the mutual banking sector and will provide existing and new members with a strong alternative to the big banks – an organisation with a national footprint that is owned by members and exists for the sole purpose of serving its members.
“Our organisations have a shared purpose – to help members reach their financial goals. This merger combines the best of both organisations, enabling us to build on our individual strengths while having greater size and scale to deliver more for members.”
People’s Choice CEO, Steve Laidlaw said: “This is a very exciting step that will see us become Australia’s leading member-owned banking organisation. By combining our highly complementary businesses, we’ll deliver significant member benefits including enhanced products, services, digital capabilities and competitive pricing through a growing national footprint, while also increasing support for community and environmental initiatives.
“This is a big win for the mutual sector and significant for the broader banking industry as we’ll be able to provide a strong member-owned choice for consumers.”
Chairman of People’s Choice, Michael Cameron said: “People’s Choice and Heritage are the perfect partners. Not only are we alike in size, but we also share very similar values, strategic aims and an absolute member focus. This is a true merger of equals. We are delighted that members saw the benefits of the merger and endorsed the proposal so strongly.”
Heritage Chairman, Kerry Betros added: “Together, we will be stronger, more secure and capable of providing more for our members. I look forward to working together as we integrate our two businesses through a shared purpose and commitment to mutuality.”
A healthy alternative to the big four banks
Of the greater industry perspective, CEO of the Business Council of Co-operatives and Mutuals CEO Melina Morrison commented: “The successful merger vote by the members of Heritage Bank and People’s Choice Credit Union cements a critical pillar of Australia’s financial industry.
“Their milestone decision creates one of the biggest member-owned banking [entities] in Australia, and ensures an ongoing and healthy alternative to the big four banks.
“Significantly, this demonstrates that scale and competitive advantage do not need to be pursued through demutualisation – a process that turns organisations into shareholder-owned, profit-driven institutions.
“Instead, banking can be provided to Australian customers in a way that ensures profits are returned to them in the form of better services,” Ms Morrison explained.
Moving forward with the process from here
As explained via both entities, with member approvals now secured the organisations are awaiting final regulatory approval for the merger.
Work is now underway to prepare for the two organisations to come together as a single organisation from 1 March 2023, with “a focus on continuing to meet the needs of members”, they explained.
Current People’s Choice chairman Michael Cameron will become the Chairman of the new organisation, with Heritage chairman Kerry Betros to become deputy chairman.
Current Heritage CEO Peter Lock will become the CEO of the new organisation, with People’s Choice CEO Steve Laidlaw to become the deputy CEO.
It was also confirmed that Mr Lock will retire 18 months after the establishment of the merged organisation, after which Mr Laidlaw will be appointed as CEO.
The new organisation will continue to operate under the existing brands of Heritage Bank and People’s Choice for an interim period during the initial integration process, they highlighted.
After that interim period, a new name and brand will be rolled out for the merged organisation.
The latest in a flurry of mergers
The merger follows an industry trend of mergers and acquisitions from other banks and it was only last December that the mutuals sector was warned by APRA it may need to prepare for mergers, should banks face severe financial stress.
[Related: Heritage Bank in merger talks]