Beyond Bank Australia and Police and Nurses Limited (PNL) have announced that they are exploring a potential merger that would, if agreed to, create one of Australia’s biggest mutual banks.
Confirming today the signing of a Memorandum of Understanding (MoU), the pair will now embark on due diligence and a board approval process for the potential union.
A vote will then be put to the members of both banks in 2025, should an agreement by both boards be reached to proceed with the merger.
The merger would create one of Australia’s largest mutual banks, collectively closing in on nearly $20 billion in total assets.
Beyond Bank, a B-Corp bank which proudly touts its ethical banking and ESG credentials, counts total assets of around $9 billion, with a loan book of around $7.4 billion and a deposit book just shy of $7 billion as at end of FY2023.
Total operating income for the Beyond also grew by 8.7 per cent to $200 million.
PNL counts total assets of more than $8 billion, a loan book of $6.7 billion and a deposit book of $6.4 billion.
Total income for the group grew by more than $20 million between FY2022 and FY2023, reaching $174 million.
PNL itself was formed out of a 2019 merger between the Police & Nurses Bank and the Bananacoast Community Credit Union (BCU) which have, for now, retained separate brands under a single parent.
The Adelaide-headquartered Beyond Bank Australia maintains operations in South Australia, the ACT, Western Australia, New South Wales and Victoria. P&N, meanwhile, is based primarily in Western Australia, with its BCU brand centred around Northern NSW and South-East Queensland.
Commenting on the signing of the MoU, PNL said – noting its successful merger with BCU four years ago – that it has “continued to search for another like-minded customer-owned bank to merge with to future-proof our organisation in this highly competitive Australian banking landscape”.
PNL chair Gary Humphreys hinted at the significant challenges facing smaller challenger institutions today, with increasing pressure to ensure they have the resources to meet technology and regulatory, particularly capital, requirements today.
“Banking has changed significantly in the past decade. The industry is highly competitive, and given the critical investments required in digital banking, cyber security, technology, and regulation, to name just a few, achieving scale through mergers like this can help ensure that we remain competitive and sustainable.
“By combining our size and people capabilities to become a stronger organisation for all our members, our merged entity will be in a better position to continue to invest in delivering the highest value and service to our members of today and the future.”
Indeed, the merger talks between Beyond and PNL continue a recurring theme in recent years of consolidation and resource pooling among Australia’s tier two and tier three banks.
Over just the last two years, Australia’s mutual banking sector has seen a hive of M&A activity, with the mergers of Newcastle Permanent and Greater Bank (completed in 2023), Heritage Bank and People’s Choice Bank (in 2023), the forthcoming mergers of G&C Mutual Bank and Unity Bank, and separately, the Victoria-Based Bank Australia and NSW-based Qudos Bank.
A recent Parliamentary report also flagged the increasing regulatory burden on smaller banks, including capital holding, risk and technology systems requirements.
Both Beyond and PNL have also committed to maintaining “a strong branch network across the existing regions”, with employees in both groups promised “meaningful roles in the merged entity are key components of the proposed merger”.
The proposed board composition of the merged entity would be made up of equal representation from the existing boards of both banks, with PNL chair Gary Humphreys to serve as the inaugural chair of the merged entity while Beyond chief executive Jake Bromwich would continue as its first CEO.
Committed to retaining its ESG credentials post-merger, Beyond Bank chair Sam Andersen stressed that the bank would continue as a “proud B Corp” institution.
“A merger will enable us to create an even stronger, more sustainable bank that continues to thrive well into the future.”
