P&N ponders $6bn tie-up

P&N Bank is considering a merger with regional east coast credit union bcu, which is about half the size of the Perth-based lender, to form a combined group with a $6 billion asset base and 150,000 customers across the country. 

The two parties have signed a memorandum of understanding to investigate a potential tie-up, with due diligence to be undertaken in the first quarter of 2019 before a final decision is made.

P&N has 15 branches in Western Australia and is ranked 17th in the BNiQ database of not-for-profit businesses, with revenue of $90.9 million for the 2018 financial year.

The bank has about $4.2 billion worth of assets. 

Using a customer-owned model, P&N is the state’s largest locally owned and operated bank.

bcu has assets worth about $1.7 billion, with operations in northern NSW and Queensland.

Some of the key terms of the MOU include no store closures or forced redundancies, while both companies would maintain their brand.   

P&N chief executive Andrew Hadley said the economies of scale of a merged organisation would provide a range of benefits.

“With such strong heritage in our respective markets, the intent would be that P&N Bank and bcu would continue to trade under their existing brand names while sharing operational synergies,” he said.

“If the merger were to proceed, P&N is committed to maintaining the job security of our staff and our branch network operations.

“Part of P&N’s five-year strategic plan has articulated the desire to partner with like-minded organisations to build scale while retaining the essential brand and member benefits of our customer-owned bank.

“In addition to technology synergies, P&N's strong digital and mobile first capability would benefit bcu members and on the other side, P&N would like to adopt bcu's significant business banking capability.”

bcu chairman Steve Targett said a partnership with P&N would ensure the east coast bank’s sutainability.

“bcu has been an integral part of the mid north coast community for nearly 50 years and we want to ensure that our members have another 50 years to look forward to,” he said.

“That is not realistic in the face of rising costs, decreasing margins, and the required investment in technology and compliance.

“Therefore, exploring merger opportunities has been a critical part of the bcu board’s strategic planning over the past 12 months.

“Partnering with P&N Bank gives us the opportunity to share the best of each other’s products, services and systems, while retaining our own unique identities and our focus on providing trusted service to our local members.”