SBS Bank poised to merge with HBS

Jenha White

Thursday 1st July 2010

SBS Bank may merge with HBS Building Society if a proposal by the board of the Hawke's Bay-based mutual is approved.

SBS Bank chief executive Ross Smith has advised that a Heads of Agreement had been signed with HBS to pursue a merger of the two New Zealand mutual building societies and that both the SBS Bank and HBS boards were in unanimous support of the opportunity.

HBS board chairman Frank Spencer stated that "times remain tough in the financial sector and the challenges of increasing regulation in a competitive environment are real for a small organisation such as HBS".

The Heads of Agreement provides for the retention of all staff and management at HBS and the 125-year-old HBS brand.

There is also a guarantee for continued and increased community distributions through sponsorships and an initial interest rate premium for term depositors.

Upon completion of the merger, HBS members will become members of SBS Bank and will have representation on the SBS Bank board.

SBS Bank has assets of $2.63 billion and HBS has assets of $185 million. SBS Bank currently has 15 branches, including four in Christchurch and two in the North Island. HBS has two branches, one in Hastings and one in Napier.

If the merger proposal is approved, the targeted effective date is 1 October 2010.

Smith says he is particularly excited about a merger with a fellow mutual building society and bank members can be assured that the merger would further strengthen SBS Bank's position in the market.

"In terms of day-to-day operations nothing will change for existing SBS Bank members except the ability to conduct their banking at more North Island branches around the country.

"At the same time, the merger will allow us to take a further step toward being a fully national, mutually-owned community bank."

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