Heritage Bank and People’s Choice Credit Union (PCCU) have jointly announced their official merger, creating one of the largest mutual banks and the ninth-largest domestic bank in Australia.
The long-time-coming merger, first mooted back in mid-2021, came with strong backing from members of each organisation, with both banks, last November, achieving well over the 75 per cent voting member threshold in favour of the proposal.
Federal Treasurer Dr Jim Chalmers last September also green lit the merger. Chalmers noted at the time that similar such mergers would help to boost competition and innovation in the banking sector, enabling mutual banks “to better compete with the larger players and deliver higher quality products and services to members”.
Competition watchdog the ACCC expressed no opposition to the merger.
The new entity will continue trading under separate Heritage/PCCU brands for at least the next 12 months, whereupon a new brand name will be chosen.
The pair will also maintain dual head offices in Toowoomba, Queensland, Heritage’s home base, and Adelaide, South Australia, PCCU’s HQ.
Heritage chief executive Peter Lock said the combined bank “establishes a new force in the mutual sector which will reset the way Australians think about banking and help propel the customer-owned model onto the radar of banking consumers around the country”.
“Combining the best of both organisations enables us to build on our individual strengths while having greater size and scale to deliver more for members and communities,” he added.
“That includes enhanced products, services, digital capabilities and competitive pricing, while also increasing support for community and environmental initiatives.”
Heritage chair Michael Cameron added that the merger had proved “much smoother” due to the banks already sharing “remarkably similar cultures, values and strategic goals”.
Lock previously noted “IT synergies” between the pair, as well as “the lack of IT debt” carried by Heritage.
With total assets of around $23 billion, the newly combined Heritage/PCCU entity would be slightly larger than the to-be-merged Newcastle and Greater Bank organisation, which combined would sit at $22 billion, and larger than the country’s formerly biggest mutual bank, Great Southern Bank (formerly CUA) with around $17 billion.
Being above the $20 billion assets threshold – and thus classified by APRA as a “significant” sized institution – the newly combined bank comes under increased supervision from the prudential watchdog, requiring additional checks on its capital and resolution plans.
The banks have confirmed they plan for no redundancies following the merger, save for a few senior executives, maintaining a combined force of around 1,900 employees.
Lock will remain chief executive of the merged bank for the first 18 months of its operation, after which he is set to retire. PCCU chief Steve Laidlaw, who will serve as deputy CEO for the first 18 months of the combined entity, will then step up to take the reins of the organisation.
The Board of the merged organisation comprises an equal number of directors – six – from each bank, with PCCU chair Michael Cameron serving as chair of the merged entity, while Heritage chair Kerry Betros becomes deputy chair. The 12-member board is then set to be cut to eight directors over the next four years.
While based largely in Queensland, Heritage has expressed its growth aspirations across NSW, with several branches already established across Sydney. Headquartered in Adelaide, PCCU also has operations in Northern Territory, with plans to expand into Victoria.
The combined mutual bank will have a network of 95 branches across South Australia, Victoria, New South Wales, Queensland and the Northern Territory, with more than 720,000 members.