Hawkes Bay's HBS Building Society has proposed a merger with Invercargill's SBS Bank by October 1 that would take the former Southland Building Society closer to its ambition of creating a national, mutual-owned 'community bank'.
SBS Bank has assets of NZ$2.63 billion and 15 branches, while HBS has assets of NZ$185 NZ$185 million and branches in Napier and Hastings. The two mutuals issued a joint statement saying SBS may merge with HBS after a proposal from HBS.
“Our members can be assured that this merger will further strengthen SBS Bank’s position in the market," SBS Bank chief executive Ross Smith said. “In terms of day-to-day operations nothing will change for existing SBS Bank members except the ability to conduct their banking at more North Island branches around the country," Smith said.
"At the same time, the merger will allow us to take a further step toward being a fully national, mutually-owned ‘community’ bank," he said.
SBS said a Heads of Agreement had been signed with HBS to pursue a merger and both boards unanimously supported the Heads of Agreement.
"The Heads of Agreement provides for the retention of all staff and management at HBS and the 125-year-old HBS brand. There is also a guarantee for continued and increased community distributions through sponsorships and an initial interest rate premium for term depositors," they said in the joint statement.
After the merger HBS members would become members of SBS Bank and be represented on the SBS Bank board.
“Times remain tough in the financial sector and the challenges of increasing regulation in a competitive environment are real for a small organisation such as HBS,” HBS board chairman Frank Spencer said.
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