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The Treasurer has approved the proposed merger of four Australian lenders into two separate mergers, in a bid to encourage competition with larger players.
On Friday (23 September) federal Treasurer Jim Chalmers announced the approval for Heritage Bank and People’s Choice Credit Union, as well as the Greater Bank and Newcastle Permanent Building Society to merge.
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Mr Chalmers said the proposed mergers are expected “to support competition and innovation in the banking sector” by allowing these customer‑owned banks to “better compete with the larger players” delivering higher-quality products and services to its members.
The banks’ mutual ownership structures will be maintained following the mergers and customers from the banks will have the opportunity to vote on the proposals as part of their annual general meetings.
Mr Chalmers said the decision followed a “thorough assessment” of whether the proposed mergers are in Australia’s national interest.
“This included consideration of stability, efficiency and the need for a financial system that is competitive and benefits Australian households, businesses and communities,” Mr Chalmers said.
Heritage and People’s Choice join forces
Queensland’s Heritage Bank and South Australia’s People’s Choice said the move will create “one of Australia’s largest customer-owned banking organisations” with approximately 720,000 members and $22.5 billion in total assets.
Chief executive Peter Lock said both banks were proudly member-owned and had deep regional roots and a “successful track record” in customer-owned banking.
The move will see Michael Cameron, the current People’s Choice chairman, appointed as chairman and Kerry Betros, the current Heritage chairman, will be appointed deputy chairman.
Mr Lock, the current CEO of Heritage, will serve as CEO of the merged organisation and Steve Laidlaw, currently CEO of People’s Choice, will be appointed deputy CEO.
Mr Lock will retire 18 months after the establishment of the merged organisation, when Mr Laidlaw will be appointed as CEO.
Both organisations will have equal board representation, with all current directors of both organisations appointed to the merged organisation’s board.
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.
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