Regional Australia Bank has been given a green light from the Australian Prudential Regulatory Authority (APRA) to merge with fellow regional NSW bank Macquarie Credit Union.

The banks have announced they will now proceed to a special general meeting with Macquarie Credit Union members next month to gain their approval for the merger.

Each bank has declared that it has the “unanimous support” of its board to go ahead with the joining of the two institutions.

Noting the increased capital and regulatory demands on smaller banks, the pair state that the merger is necessary to be able to keep pace with changes in the banking industry – most notably the sector’s rapid digitalisation and increased regulatory demands.

These demands necessitate “significant and ongoing investments in new technologies, specialist employees and the maintenance of ‘best practice’ risk management frameworks and corporate governance structures”.

“Together, our organisations are much stronger than if we remain apart, being far better placed to navigate the current regulatory and competitive environment”.

They added: “The alignment of both organisations’ strategic focus and absolute commitment to enhance our members’ financial and social wellbeing, while at the same time [building] better regional communities through the mutual model was also a driving factor in the recommendation to merge.”

Both banks are in reasonable financial shape, though the Armidale-based Regional Australia Bank (RAB) is no doubt the more senior and stronger performing of the pair. RAB counts total assets of $3.2 billion and a loan book of $2.5 billion (increasing 5.0 per cent on 2022 figures).

RAB also reported revenues of $106.2 million and an NPAT of $32 million last year, its 2023 annual report showed.

The junior party in the merger, Dubbo-based Macquarie CU counts $138 million in assets, with its loan book a little under $100 million. Its revenue last year was just over $6 million.