Perth-based P&N Bank has agreed to merge with its smaller east coast counterpart bcu, creating one of the largest customer-owned banks in Australia with $6 billion of assets.
Perth-based P&N Bank has agreed to merge with its smaller east coast counterpart bcu, creating one of the largest customer-owned banks in Australia with $6 billion of assets.
The boards of the two organisations agreed to merge after a due diligence process that began last December.
The two brands will be retained in their discrete markets, with the benefits expected to flow from a combination of their back-end systems and greater financial scale.
P&N Bank chief executive Andrew Hadley, who will run the merged group, said the due diligence process, completed in conjunction with external advisers EY and Adelaide-based Wallmans Lawyers, identified significant synergies.
“This is a significant opportunity to grow our organisation, expand our presence and enhance the value we provide our customers while retaining all the benefits they enjoy from Western Australia’s largest locally owned and operated bank,” Mr Hadley said in a statement.
"The P&N brand, the service offering that our customers enjoy, our new Perth CBD head office, our branch network and our staff will all be retained through the merger.
“In practical terms, P&N Bank customers will not see any immediate change in their day-to-day banking, however, we expect to offer an enhanced customer proposition after the merger is approved and complete.”
The next step in the merger process is to obtain regulatory approvals from the Australian Prudential Regulation Authority and other regulators; this is expected to take several months.
Mr Hadley said the strategic benefits of P&N and bcu joining forces related to enhancing financial strength and capitalising on the benefits of increased size and scale.
"Ongoing changes to banking in terms of technology requirements, increased regulation, and emerging competitors and business models, bring increased customer expectations and a need for greater investment,” he said.
“Additional size and scale will place us in a much stronger position to compete.”
P&N has 15 branches in WA and is ranked 17th in the BNiQ database of not-for-profit businesses, with revenue of $90.9 million for the 2018 financial year. It has about $4.2 billion worth of assets.
Coffs Harbour-based bcu was formerly known as the Bananacoast Community Credit Union. It has assets worth about $1.7 billion, with operations in northern NSW and Queensland.
As the two entities do not have shareholders, the merger cannot be valued like a public company takeover deal.
Howeever, as a measure of respective value, P&N had net assets of $285 million at June 30 while bcu had $139 million.
