In a first, two mutual banks will merge, with G&C Mutual Bank and Unity Bank aiming to do so by around September 2020.
The merger “will create one of Australia's largest nationally-operating mutual banks with projected assets as at the merger date of around $2.5 billion, a network of 35 branches and a full suite of digital payment services,” the two banks advised members at their websites yesterday.
“The increased scale and cost synergies from the merger will allow the merged organisation to fund further innovative products and community support initiatives,” they said.
"Continued consolidation within the mutual banking sector is inevitable,” Lisa Barrett, a credit analyst at S&P Global Ratings wrote in a report, "Larger, Well-Managed Australian Mutuals Will Prevail As Market Consolidates," this week.
"Substantially higher operating and funding costs may materially impede mutuals' ability to compete with the major and regional banks. Enhancing the scale of operations through mergers is one obvious way for the mutuals to neutralize some of these comparative disadvantages, particularly in the face of rising regulatory and compliance costs," Barrett wrote.
G&C’s origins, 60 years ago, was as the Public Works Department credit union servicing public sector employees. It has since been through 18 mergers.
Unity Bank started in 1970 as Waterside Workers’ of Australia Credit Union and has been through nine mergers in the last 10 years.
All trading names currently used by G&C and Unity “will be retained in the period immediately following the merger, with the intention that Unity Bank will become, over time, the merged organisation's predominant trading name,” the two banks said yesterday.