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Two mutual banks have become the latest lenders to explore the potential of merging their two entities.
Teachers Mutual Bank Limited and Australian Mutual Bank Limited have revealed that they are exploring merging the two mutual banks, and have now signed a Memorandum of Understanding (MOU).
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If merged, the two banks would create one of Australia’s largest member-owned banks, with $13.4 billion in total assets and more than 300,000 members.
While the merger remains subject to due diligence and approval by regulators and members, the expectation is that the merger would take place in 2026 if all approvals are received (the target date for member vote is sometime in 2026, subject to due diligence and relevant regulatory approvals).
The two lenders have said that bringing together the two banks would provide immediate benefit and opportunity for better member outcomes, increase scale of the lenders, and provide “a platform for strong investment in enhanced products and services, modern technology, cybersecurity and fraud/scam prevention, and digital banking services”.
What would the merged entity look like?
According to the MOU, there would be an integrated board to govern the merged entity and a CEO appointed to lead the merged group. It is expected that the current CEO of Teachers Mutual Bank Limited, Anthony Hughes, would be CEO.
Mark Worthington, the current CEO of Australian Mutual Bank Limited, has agreed to “provide support in the initial months post-merger”.
However, the two banks have said the leadership of the merged organisation would “leverage the strengths of both banks ensuing retention of critical knowledge and expertise from both organisations”.
It is proposed that the chair of Teachers Mutual Bank Limited would chair the merged entity.
It is also expected that, upon merging, the Australian Mutual Bank brand would be retained.
Speaking of the merger, Hughes said: “Both banks have strong foundations and an ongoing commitment to member-owned banking. We have a shared excellence in delivering great service for our members, and supporting the vocations and communities that support us.
“Combining our financial strength, together with the common technology platforms, will allow us to more quickly invest and deliver the services that matter to our members,” the Teachers Mutual Bank CEO said.
CEO of Australian Mutual Bank Limited, Mark Worthington, added: “As member-owned banks, we are committed to our members and communities. Our driving purpose is to provide ethical and valuable banking services to our members. A vision of the merged bank is to offer rewarding careers for our 750 employees.
“As a merged entity, we would also remain committed towards championing sustainability and retaining our B Corporation Certification.”
The merged entity will continue to engage with the Australian Mutuals Foundation, as well as continue to provide support to the industries and communities that support it, through sponsorships, scholarships and other community partnerships.
Mutual merger mania continues
The proposed merger is the latest move by Teachers Mutual Bank Limited to grow its presence, after it merged with Pulse Credit Union Limited in 2021. That same year it also formalised its merger with Firefighters Credit Co-operative Limited.
The mutual banking space has been through a raft of merger opportunities in the past 12 months.
Of the six customer-owned banks that joined The Adviser for its mutual bank roundtable in September 2024, for example, four had either completed a merger or were pursuing one in the last financial year. Just Teachers Mutual Bank (TMB) and Great Southern Bank (GSB) were the odds one out at the time (but GSB has previously said it would “seriously consider” a merger opportunity if one presents itself).
Merger announcements in the customer-owned space from this year include:
- The banking business of insurance mutual Australian Unity, which is set to be acquired by Bank Australia.
- The merger between Summerland Bank and regional NSW lender Regional Australia Bank.
- The long-delayed merger between G&C Mutual Bank and Unity Bank (which was approved by members last month and banking system integration is expected in March 2025.)
The trend continues on from other notable mutual mergers, including Greater Bank and Newcastle Permanent, and Heritage Bank and People’s Choice Credit Union (now People First Bank).
Other banking mergers that have been proposed this year include a venture between Tasmanian-based lender MyState Limited (MyState) and Bundaberg-headquartered lender Auswide Bank (Auswide) - which is set for member vote on 3 February 2025.
However, not all merger opportunities have been successful this year, with Police & Nurses Limited (P&N) revealing that it had “decided not to proceed” with its proposed merger with Beyond Bank Australia.
You can find out more about the wave of mutual mergers in the October 2024 edition of The Adviser magazine, here.
[Related: Mutual mania: The great wave of mergers continues]
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