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A vote from members of Heritage Bank and People’s Choice Credit Union is the final approval required for a successful merger of the two lenders.
On Friday (23 September), Treasurer Jim Chalmers approved the merger of the two customer-owned lenders, paving the way for a member vote on the issue in the coming months.
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Heritage Bank chief executive Peter Lock will soon become the head of a larger group after the Queensland-based lender mergers with South Australia’s People’s Choice Credit Union.
Steven Laidlaw, currently the CEO of People’s Choice, will become deputy CEO of the merged organisation. Mr Lock will retire 18 months after the two organisations come together, at which point Mr Laidlaw will be appointed CEO.
Heritage CEO Mr Lock described the merger as a “compelling opportunity” to create one of Australia’s largest customer-owned banking organisations.
“We are confident a merger is firmly in our members’ best interests. Joining forces represents a unique pairing of equals, offering unparalleled cultural and strategic alignment and an absolute commitment to mutuality,” he said.
People’s Choice CEO Mr Laidlaw said: “By coming together we will create a national member-owned banking organisation that will be of a size and scale to enable us to deliver outstanding products and services for our members.”
Should members vote in favour of the merger, the new organisation is expected to be established in early 2023.
Heritage is one of Australia’s oldest and largest customer-owned banks with 330,000 members, 900 employees, $12.2 billion in total assets, and 62 branches and mini branches.
People’s Choice is Australia’s largest credit union with 390,000 members, almost 900 employees, $10.3 billion in total assets, and 33 branches and lending & advice centres.
Both groups have an extensive national network of accredited mortgage brokers.
Stewart Saunders, Heritage Bank chief customer officer, said the proposed merger with People’s Choice Credit Union would create one of the largest customer-owned banking organisations in the country.
"We think this would be absolutely positive for the industry, as it would create a powerful, national mutual that would have increased size and scale, with greater capacity to compete against the majors," he said.
"The broker channel remains an integral part of our operations, whether as Heritage, or as a merged entity. Both Heritage and People’s Choice and offer particular strengths which will benefit the merged organisation. The increased size and scale is particularly important in implementing the technology improvements needed to remain competitive and deliver the products, services, and digital capabilities that members want."
Greater Bank and Newcastle Permanent to merge
The announcement came at the same time as Greater Bank and Newcastle Permanent Building Society.
The deal would see the two combined have a total asset portfolio of $19.9 billion and 1,600 staff and boast over 600,000 forming “one of Australia’s largest customer-owned financial institutions”.
With both banks operating side by side in the region “competing for customers” for more than 75 years, the move will create a “financially stronger” lender able to compete against the bigger players.
“Combining our resources and financial strengths provides an unparalleled opportunity to grow and innovate, to deliver even better value for our customers,” Greater Bank said.
In approving the deals, Mr Chalmers said it was expected “to support competition and innovation in the banking sector” by allowing these customer‑owned banks to “better compete with the larger players”.
It follows a spout of consolidation within the Australian banking industry over the past decade, which has seen the number of mutuals almost halved to around 70.
[Related: Greater Bank and Newcastle Permanent merger gets go ahead]
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