Directors say merger is in best interests of members
A proposal to merge two of Australia’s largest customer-owned banks, Greater Bank and Newcastle Permanent Building Society, has won the unanimous backing of both organisations’ board of directors.
The directors have recommended their respective members vote in favour of joining the two iconic Hunter-based mutuals. Greater Bank chair Wayne Russell and Newcastle Permanent chair Jeff Eather (pictured) have formalised the boards’ support by signing a Merger Implementation Agreement.
The boards’ endorsements follow the announcement of a Memorandum of Understanding in August 2021 on the merger.
The merger proposal will now be submitted to APRA for review, before being put to members of both organisations at meetings likely to take place later this year.
Russell said both organisations have conducted extensive due diligence over the past five months and unanimously agreed the proposed merger is in the best interests of their respective members.
“The due diligence 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,” Russell said.
“Combining our resources and financial strengths provides an unparalleled opportunity to grow and innovate, to deliver even better value for Greater Bank and Newcastle Permanent customers. This has been, and remains, the foundation for entering into such an arrangement.
“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.”
Under the proposal endorsed by the respective Boards, the merged organisation would:
- Become one of Australia’s leading customer-owned financial institutions;
- Keep both iconic brands - Greater Bank and Newcastle Permanent;
- Serve a combined customer base of almost 600,000;
- Bring together both organisations’ workforces with no forced redundancies as a resultof the merger for at least two years;
- Maintain the Hunter-based customer contact centres and headquarters; and
- Retain the current number of combined branches for at least two years.
Eather said merging the two locally-grown mutuals would ensure long-term sustainability, without compromising either’s values.
“This is a highly compelling opportunity to grow and compete on our terms. Importantly, we remain fiercely committed to being customer-owned and continuing to invest profits for the benefit of our customers and the communities we serve,” said Eather.
“Combined, Greater Bank and Newcastle Permanent have $19.8 billion in total assets and acustomer base of approximately 600,000, and, in merging, will create one of Australia’s largest customer-owned financial institutions. That puts us in an incredible position to be a real challenger and remain a significant competitor in the banking sector.”
Consolidation within the Australian banking industry over the past decade has seen the number of mutuals almost halved to less than 70, as other smaller financial institutions have united to remain competitive and sustainable
KPMG suggested the trend was set to continue with a quarter of Australian customer-owned banking organisations anticipating being involved in merger activity this year, and a further 20% considering the possibility.
If the Greater bank and Newcastle Permanent merger proceeds, it is proposed Russell will chair the merged entity and Eather, will assume the role of deputy chair. Newcastle Permanent CEO
Bernadette Inglis will be CEO and Scott Morgan, currently CEO of Greater Bank, would be the entity’s deputy CEO.