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New Zealand's Pyne Gould Corp in merger talks to set up new retail Bank with $2.2 billion worth of assets

NZ’s Pyne Gould Corp said today that it’s in merger talks with other two savings institutions to form a retail bank. According to its plans, the bank will be listed on the country’s stock exchange with estimated NZ$2.2 billion worth of assets and will center on the provision of banking services to rural customers and small businesses.


The merger, to involve Pyne Gould’s finance wing, MARAC, with the Canterbury Building Society and the Southern Cross Building Society; will give the planned bank the scope to grow with an aim of doubling its asset base in a five year time period. In a joint statement issued by the companies, they said that there is a vital opportunity in entering the banking market because it was clear most New Zealand consumers and New Zealand businesses were seeking an alternative to the conventional banks in the markets that the companies intend to focus on. Currently, there are 19 registered banks in the country, a majority of which are investment banks that offer wholesale services.


New Zealand’s retail sector is subjugated by Australia’s four big banks, ANZ Group, Westpac, National Australia Bank that owns the Bank of New Zealand, and the Commonwealth Bank of Australia that owns ASB. On the other hand, there are three small retail operations that are owned by the government- Kiwibank based on the country’s Post Office network, SBS and TSB banks that are region based and have small retail networks.


Pyne Gould said that most of the merger’s fine print was still under discussion but it is hoped that it would be the biggest shareholder although board structure and ownership proportions are still to be determined. Pyne Gould owns an 18.3% stake in PGG Wrightson, a rural services business, and Perpetual Trust, a trustee services firm; besides MARAC. The three companies have a cumulative 70,000 customer base with 70 branches and agencies and about 360 staff. If the merger is successful, the new bank will be created early next year and will apply for a banking licence at around mid 2011.


Currently, none of the companies in the merger is a registered bank. Due diligence is yet to be finished  and a proposal is expected in the latter part of this year with an agreement expected in place in the coming few months but will still need approval from the companies shareholders, depositors, debenture holders and regulators. Under the agreement, the new bank will be headquartered in the South Island.


June 2, 2010.


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