Newcastle Permanent Building Society and Greater Bank may finally forge a merger, in the process forming the largest mutual bank in Australia with A$19.8 billion in assets.
Greater Bank and Newcastle Permanent yesterday announced the signing of a Memorandum of Understanding to explore merging the two organisations.
Both brands will be retained.
Bernadette Inglis, CEO of Newcastle Permanent will be chief executive while Scott Morgan, CEO of Greater Bank is to be the entity’s deputy CEO.
Wayne Russell, chair of Greater, will chair the merged entity while Newcastle Permanent’s chair, Jeff Eather, will assume the role of deputy chair.
The new mutual bank will have a combined customer base of around 600,000 and more than 1600 staff.
There will be no forced redundancies as result of merger for at least two years.
Both these Hunter region ADIs have been underperforming their mutual banking peers lately.
NPBS reported loan growth of 3.5 per cent over the year to June 2021 while Greater’s loan book went backwards to the tune of 6.1 per cent, and has been in decline for two years on APRA data.
Among mutual banks, Teachers Mutual Bank, G&C Mutual Bank, Regional Australia Bank, Community First Credit Union and Bank Australia have all delivered double digit loan growth over the last year and at least 13 mutual ADIs are growing faster than system.
Overtures from any listed bank to one or both of these mutual ADIs have been rumoured in the past and presumably shelved.
In a demutualisation, Newcastle Permanent’s members could plausibly pocket in the order of $6000 each. For Greater’s members the payday would be in the order of $4000.
Newcastle Permanent Building Society and Greater Bank are stoutly capitalised by industry standards, with a capital adequacy ratio of 21.2 per cent for NPBS and 17.7 per cent for Greater.