Three mutual mergers on track

Banking Day staff M&A
P&N Bank take the long way round in search of national prominence and scale economies.    (Image: @WA_Police on Twitter)
P&N Bank take the long way round in search of national prominence and scale economies. (Image: @WA_Police on Twitter)

A trio of east coast mutual ADI merger proposals are moving along in line with published timetables, each setting up potentially disruptive combinations by the end of this year.

A vote of BCU members on their planned merger with the far larger P&N Bank (from Western Australia) is targeted for the fourth quarter of 2019, or so Steve Targett, chair of northern NSW-based BCU told his home town newspaper, The Coffs Coast Advocate, late last week.

The enlarged P&N group will have around A$6 billion of assets and 150,000 members, assuming members and regulators give the greenlight to this cross-country union in time to make headlines in 2020.

Andrew Hadley, CEO of P&N, used an interview with The West Australian to reprise high-minded themes aired when the merger was first announced late last year.

Hadley - who is leading the long-dominant force among the remnants of mutual ADI scene from Perth toward an ambitious, nationwide rollup - told his own home town newspaper on Friday that the BCU merger was “a significant opportunity to grow our organisation (and) expand our presence”.

“We hope this is the first step,” Hadley said, of P&N’s first merger in more than 10 years.

“It now gives the opportunity to expand on the east coast as well as the west.

“The customer-owned banking industry is going through a period of consolidation ... and if we really do want to deliver the best outcome for our members, we do need to get a level of size and scale.

“Even within the region where BCU is operating there is quite a bit of merger activity. So we are certainly keeping an eye on what’s going on there,” Hadley told the newspaper.

One of these mergers involves Maleny Credit Union, one of the country’s tiniest credit unions. But MCU is in the midst of reaching an industry first – a direct merger of a credit union with a non-bank financier, and supplying a unique pathway to a banking licence.

Maleny’s champion – Firstmac – is both the largest and one of the oldest NBFIs in Australia, a mortgage funder that grew its loan book by a sector-leading 24 per cent to A$10 billion last financial year. Firstmac’s 2017/18 profit of $9.6 million last financial year was around three quarters of the earnings of the nominally less profit-minded P&N (though P&N’s return on assets was twice that of the privately-owned NBFI).

Maleny Credit Union has set Tuesday, 30 April as the date for the final and decisive member votes on its planned takeover by Firstmac. This is a few weeks later than originally planned.

MCU will hold a Scheme Meeting (at 5:30PM Brisbane Time) that day, followed by the Demutualisation Meeting.

In an earlier vote on the concepts (rather than the final act), MCU said 42 per cent of members voted in that ballot, with 96 per cent of members voting “yes” to the Firstmac offer.

If the proposed transaction is approved, Firstmac will buy MCU for A$7 million, with $2 million paid to the MCU Charitable Trust and all local staff keep their jobs.

The Brisbane-based mortgage manager continues to wait (and wait) for APRA’s approval or denial on its request for Firstmac’s own long-wanted authority to convert to banking status.  Presumably a final decision will be known very soon.

Lastly, Holiday Coast Credit Union, with serves a NSW regional market to the south of BCU, is progressing carefully toward its own proposed merger with Armidale-based Regional Australia Bank. This pair will have around A$2 billion in assets and 85,000 members once their merger is concluded.

Holiday Coast has scheduled four member information forums over the next week or so, with the first being held tonight in its home town of Wauchope, followed by one in Port Macquarie tomorrow night and then two more in Tuncurry and Taree early next week.

HCCU are still hoping to hold a Special General Meeting of Members “during May 2019” according to the most recent update at its website, with both ADIs working toward a formal merger from the beginning of July.