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Members of the two banks have green-lit their merger, with Newcastle Greater Mutual Group Ltd set to come into being next year.
Members of Greater Bank and Newcastle Permanent have voted in favour of merging the two lenders together under Newcastle Greater Mutual Group Ltd.
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The merger, which will come into effect from 1 March 2023 should it gain regulatory approvals from the prudential regulator, will create a combined entity with more than $20 billion in total assets and approximately 600,000 customers.
However, it will follow a multi-brand strategy — with both Greater Bank and Newcastle Permanent remaining as separate identities under the merged group.
As such, there will be no change to customer bank accounts or banking details on merging.
Speaking to The Adviser following the member vote on Wednesday (2 November), Jeff Eather, chair of Newcastle Permanent, noted that competition law had prohibited the lenders from “talking strategy” until a full determination had been made by members. (However, Newcastle Permanent and Greater Bank had made a number of commitments to members when proposing the merger, including that maintaining the branch network would remain a critical part of the new entity’s strategy moving forward.)
Now that the vote has taken place, the group will look to review the brand offerings, as well as future broker strategy.
Mr Eather reiterated that brokers would continue to be an “incredibly important partner” to the group.
He told The Adviser: “Brokers are an incredibly important partner with Newcastle Permanent today and nothing there will change.
“But how we use [brokers] in terms of the new merged organisation, how we move forward, and how we manage our brokers will be determined as part of that strategy.
“Brokers are a really important part of the landscape of the financial industry in Australia and we are very, very supportive of brokers as we are today and have a great relationship with them.”
Speaking of mortgages more broadly, he said that there was “great benefit” in continuing a broad breadth of product offering — noting that while there were some complementary products across both brands, generally the two banks offered “different rates for different products, targeting different customer groups”.
Leadership structure of the new group
The merged organisation, Newcastle Greater Mutual Group Ltd, will be led by a board comprising four directors from each of the current Greater Bank and Newcastle Permanent boards.
Wayne Russell, chair of Greater Bank, will assume the role of chair while Bernadette Inglis, chief executive of Newcastle Permanent, will be group CEO.
Mr Russell commented: “Creating a financial powerhouse based here in the Hunter is an incredibly exciting prospect and I speak for both organisations when I say how proud we are that our members share our vision and voted a strong ‘yes’. Thank you to everyone who voted on the proposal.
“Bringing together our two brands under the one merged entity better positions us to compete with the major banks and deliver high value, competitive banking for our customers.
“Final validation of the votes is underway but we’re confident the provisional outcome will be confirmed, and the merger will proceed.”
Mr Eather also thanked members for casting their votes “at this important moment in [the] organisation’s history”.
“The response has far exceeded our constitutional thresholds and we’re very encouraged by the provisional results,” Mr Eather said.
“Both Newcastle Permanent and Greater Bank have long championed customer-owned banking, and merging will enable us to secure its future here in regional NSW.
“The new organisation will have size and scale that we can leverage to grow our business over the longer term. We now have a strong springboard to take our way of banking to more Australians, while keeping skills and expertise, jobs and investment here.”
The merger was approved by Treasurer Jim Chalmers MP in September.
Now that the member vote has taken place, a final submission will be made back to APRA for it to consider before formal sign-off.
The expectation is that the merged entity will operate under a single balance sheet from 1 March 2023.
[Related: 2 community bank merger proposals approved]
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