SBS Bank and HBS sign up for merger

SBS Bank, the former Southland Building Society, is merging with HBS Building Society in the latest consolidation in the financial sector.

A heads of agreement has been signed to pursue a merger and both boards are in unanimous support. If the merger is approved, the targeted effective date is October 1.

The 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.

HBS members will become members of SBS Bank and will have representation on the SBS Bank board.

"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," SBS Bank chief executive Ross Smith said.

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

HBS chairman Frank Spencer said times were tough in the financial sector and the challenges of increasing regulation in a competitive environment were real for a small organisation such as HBS.

Last month, CBS joined Marac and South Cross Building Society in signing a memorandum of understanding to investigate a merger to create a "Heartland" bank.

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.

SBS Bank has been clear about an ambition to become a national player.

It reported an operating surplus of $19.4 million in the year to March 31.

- NZPA