Bank CEO pledges to maintain broker offering following merger

The combined entity would collectively have $19.8 billion in total assets and a combined customer base of approximately 600,000 customers.

However, it is intended that the two brands would be “preserved”, with both Newcastle Permanent and Greater Bank continuing as “individual brand identities”.

The mutuals have said that the combined entity would employ more than 1,600 people (with no forced redundancies as a result of the merger for a period of at least two years) and would retain a combined network of 100 branches for a period of at least two years. They would also maintain their locally based customer contact centres and headquarters. 

If the merger is approved, there would be an “aligned board” to govern the merged entity, and the retention of both existing CEOs to support the integration process and “the acceleration of value to customers”.

A new leadership structure would “harness the strengths of both entities, ensuring it has the commensurate skills to grow the brands while retaining critical institutional knowledge and expertise from both parties,” according to the two lenders.  

It is proposed that Greater Bank chair Wayne Russell will chair the merged entity, alongside Newcastle Permanent’s chair, Jeff Eather, who will assume the role of deputy chair.

Newcastle Permanent chief executive Bernadette Inglis will be CEO of the merged entity and Scott Morgan, currently CEO of Greater Bank, will be the entity’s deputy CEO.  

Completion of the merger remains subject to due diligence and then approval by the members of both Newcastle Permanent and Greater Bank, along with regulatory approvals, including the Australian Prudential Regulation Authority and the federal Treasurer.  

Subject to these steps, the target date for the completion of the merger is early 2022.

Broker channel support to continue

While Newcastle Permanent already operates in the broker channel, Greater Bank does not currently distribute mortgages through brokers (instead having its own mobile lenders).

Speaking to The Adviser following the announcement, the Newcastle Permanent CEO told The Adviser that the lender’s relationship with the broker channel would continue.

“Should the merger go forward, then Newcastle Permanent would continue – in that brand – to have a vibrant relationship with brokers,” Ms Inglis said.

“As we think about the future strategy of the organisation, which we will do over time, we will absolutely look at Greater Bank’s [mortgage distribution] and how both brands operate across different channels for customers: direct and broker. At this point in time, though, I can say absolutely nothing changes in our relationship with the broker community.”

According to the two mutuals, the merged entity would benefit from “the shared capabilities of both brands, investment and technology enhancements, to continue to deliver a best-in-class customer experience”. 

The chair of Greater Bank, Mr Russell, said: “Both organisations independently have exceptional financial strength. Our collective capabilities and capacity will enable us to invest more in  technology and innovation, and offer great value for our customers. We believe this is an incredible opportunity to grow our brands and help more Australians with their retail banking needs.” 

The chair of Newcastle Permanent, Mr Eather, added: “This proposed merger of two highly successful  Hunter-based organisations will create a large, forward-thinking financial institution that sustains the core principles of customer-owned banking. It will also position the Hunter region as a financial powerhouse in Australia. Our vision is to be a vibrant employer of choice that delivers fulfilling and rewarding careers for more than 1,600 people.” 

Speaking of the merger, the CEO of Newcastle Permanent, added: “A merger provides an opportunity for transformational change to future-proof both organisations – more so than can be achieved individually. It enables the combined organisation to carve out a presence as a beacon for the mutual sector, and be a significant competitor in retail banking.

“Newcastle Permanent and Greater Bank have attractive and complementary characteristics which we believe make this merger highly compelling, and provide significant value to customers, through improved technology and organisational capability,” Ms Inglis added.

Similarly, the CEO of Greater Bank, Mr Morgan, stated: “Success in the banking sector is dependent on the ability to rapidly adapt, meet evolving customer expectations and new regulatory demands. Smaller organisations can be at a disadvantage in keeping pace with required investment in frequent and complex technology advancements; a decade ago there were circa 200 mutuals across Australia, today the number is fewer than 70. We are both committed to our communities and driving better value for our customers.” 

People power: The changing face of customer-owned lenders

The mutuals have undergone a huge amount of change in the past year, with lenders merging, new tech being released, and brokers highly rating their experiences with them.

In fact, the number of mutual ADIs almost halved between 2010 and 2020, from 116 to 64.

Among the mergers in the last year alone were:

•  Firefighters Credit Co-operative + Firefighters Mutual Bank
•  IMB Bank + Hunter United
•  Lysaght Credit Union + Horizon Bank
•  Pulse Credit Union Limited + Teachers Mutual Bank Ltd

More mergers are also expected, with Macquarie Credit Union and Orange Credit Union now exploring the possibility of merging the two longstanding member-owned banking organisations based in the Dubbo and Orange regions, too.

Find out more in the August edition of The Adviser magazine, focused on mutual banks, out now!

[Related: People power]