SBS may merge with HBS Building Society if a proposal by the board of the Hawkes Bay-based mutual is approved. Approval seems likely.
SBS chief executive Ross Smith told the Otago Daily Times yesterday that a heads of agreement had been signed with HBS to pursue a merger of the two New Zealand mutual building societies and that both the SBS Bank and HBS boards were in unanimous support of the opportunity.
"We are particularly excited about a merger with a fellow mutual building society of more than 100 years' standing with identical principles and values. Our members can be assured that this merger will further strengthen SBS Bank's position in the market."
The best interest of the SBS members had always remained the bank's top priority, he said.
HBS was the "perfect partner" for SBS as it worked on its ambitions to become a national player. The bank would remain owned by its customers and take a "slow but sure" approach through New Zealand's provinces before moving in Auckland and Wellington, Mr Smith said.
HBS had a good footprint in Hawkes Bay, it had been around for along time and its ideals were aligned with SBS.
"I would be very surprised if members see any major issues with this merger. It is not as though they are selling out to a foreign-owned corporate."
Asked about what role he thought an enlarged SBS would play in New Zealand's banking sector, Mr Smith said there was a gap left when the former Trust Bank network disappeared and he planned for SBS to fill that gap.
He planned a "people's bank" which gave communities a sense of ownership.
When he was growing up, the first bank people went to when they opened a bank account was the local savings bank, such as the Otago Savings Bank.
"It was about community service and looking after your customers."
HBS members vote on the merger on August 31. If the proposal is approved, the planned date for the merger is October 1.
In terms of day-to-day operations, nothing would change for existing SBS Bank members except the ability to conduct their banking at more North Island branches, Mr Smith said.
Other mutual building societies in New Zealand of interest to SBS were in Nelson, the Wairarapa and Heretaunga. However, no merger discussions were yet under way with any of those societies, he said.
The heads of agreement provided for the retention of all staff and management at HBS and the 125-year-old HBS brand. There was also a guarantee for continued and increased community distributions through sponsorships and an initial interest rate premium for term depositors.
Upon completion of the merger, HBS members would become members of SBS Bank and would have representation on the SBS Bank board.
PROPOSED MERGER
• SBS Bank branches: Invercargill, Queenstown, Cromwell, Gore, Dunedin, Timaru, Christchurch (four), Blenheim, Nelson, Hamilton, Tauranga.
• HBS branches: Napier and Hastings.
• SBS has assets of $2.63 billion.
• HBS has assets of $185 million.
• HBS vote takes place August 31.
• Merger on October 1.
