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PGC's wealth management not automatically in merger

Thursday 26th August 2010

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Pyne Gould Corp's wealth management businesses won't automatically go into the proposed merger to create a listed bank, chief executive Jeff Greenslade told analysts in Christchurch.

A new-look Perpetual Group with a focus on wealth management would be an attractive addition to the proposed bank, but it will not be part of the initial merger, he said.

"Marac's going in and our insurance capabilities - that's all at this stage," he said.

PGC is working through due diligence with partners Canterbury Building Society and Southern Cross Building Society, with a goal to merge the lenders next year and form the country's only locally-owned and listed bank.

"We have an understanding with the two building societies that the wealth management business maybe part of Heartland bank," chairman Bruce Irvine said on the same call.

"That will be determined as a separate transaction."

Greenslade said the group is still reviewing whether cornerstone shareholder George Kerr's Torchlight Investment Group has a role to play in the bank.

Torchlight manages assets and investments and makes counter-cyclical investments during periods of low liquidity, and forms part of Pyne Gould's Perpetual Group, which also offers funds management and trustee services.

The financier and rural services provider expects its joint venture with the Automobile Association will offer the proposed merged a ready-made customer base, and is integral to the company's strategy.

The bank will need approval from all stakeholders in the three firms, including Marac's debenture holders.

The company reported net profit of $22 million, or 4 cents a share, in the 12 months ended June 30, compared to a loss of $54.4 million, or 55 cents a year earlier, confirming last week's statement.

The shares fell 2.3% to 42 cents in trading today, and have dropped 10% this year.

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