Creating one of Australia’s leading customer-owned banks

We’ve signed a Memorandum of Understanding (MoU) with Greater Bank to explore uniting our two locally-grown organisations through a merger to create one of Australia’s largest customer-owned banks.

The MoU opens discussion to determine the benefits that can be gained from bringing together our two organisations — which collectively have $19.8 billion in total assets* and a combined customer base of approximately 600,000 customers.

Both organisations independently have exceptional financial strength, and together we would have an increased ability to invest in technology enhancements and offer even better value for our customers.

CEO

Some key elements of the proposed merger on completion include:

  • npbs icon Becoming one of Australia’s leading customer-owned financial institutions, serving a combined customer base of approximately 600,000 customers.
  • Better value banking icon Preserving both iconic brands, Newcastle Permanent and Greater Bank.
  • Home Loans Retaining a combined network of 100 branches for a period of at least two years.
  • chat Maintaining our locally-based customer contact centres and our headquarters in Newcastle.
  • help and support icon Employing more than 1,600 people with no forced redundancies as a result of the merger for a period of at least two years.
  • icon Increasing our ability to invest in new technologies and enhancements to the services we each offer our customers.

Success in the banking sector depends on being able to adapt quickly to meet evolving customer expectations and new regulatory requirements. Smaller organisations can be at a disadvantage in keeping pace with required investment in frequent and complex technology advancements; a decade ago there were circa 200 mutuals across Australia, today the number is fewer than 70.

As customer-owned mutuals, we are both committed to our communities and delivering value for our customers into the future. We believe there is a place for a large, forward-thinking mutual in our region: one that can sustain the strong principles of customer-owned banking and innovate faster to keep pace with customers’ expectations. As a combined organisation, we can be a beacon for the customer-owned mutual sector and a significant competitor to major banks and retail banking.

The MoU sets out a proposal for an aligned Board to govern the merged entity, with the retention of both existing CEOs to support the integration process and the acceleration of value to customers.

For the merged organisation the following leadership structure is proposed:

  • Chair: Wayne Russell (current Chairman of Greater Bank)
  • Deputy Chair: Jeff Eather (current Chair of Newcastle Permanent)
  • CEO: Bernadette Inglis (current CEO of Newcastle Permanent)
  • Deputy CEO: Scott Morgan (current CEO of Greater Bank)

The MoU is the first step in this process. Completion of the merger remains subject to due diligence and then approval by the members of both Newcastle Permanent and Greater Bank, and regulators, including the Australian Prudential Regulation Authority and the Federal Treasurer. Subject to these steps, the target date for completion of the merger is early 2022.

We expect to update customers on the merger discussions later this year, alongside our 2021 Annual Report and Annual General Meeting.

See Greater Bank's Memorandum of Understanding info here.

What does this mean for me?

For now, this means no change at all for you as a customer. We’re still in the very early stages of the process.

Should the merger proceed, you’ll still be a customer of Newcastle Permanent and continue to enjoy the great products and friendly service we’re known for.

In fact, the reason we’re so excited is we believe a merger will help us serve you even better.

FAQs

 

We’ve entered into a Memorandum of Understanding but the merger process is still in early stages. We have agreed that merging Greater Bank and Newcastle Permanent makes sense and we’re committed to exploring the commercial and customer benefits of bringing the organisations together.

We’re now going to undertake extensive due diligence which will determine if merging would be best thing for both sets of our members. The final decision is made by our members, who would vote on the merger in 2022.

Both brands will be retained following the merger, and for a period of at least two years the combined network of 100 branches will be retained.

A key goal of the merger is to create new opportunities to grow our combined business, expand our presence and enrich our offering to customers. This will in turn provide our talented employees with new growth and development opportunities, and strengthen the merged entity’s position as an employer of choice in the region.

A key goal of the merger is to create new opportunities to grow our combined business, expand our presence and enrich our offering to customers. This will in turn enable us to be a vibrant employer of choice and provide our people with new growth and development opportunities.

We will have more than 1,600 employees on merging, and as part of the MoU, we’ve agreed that for a period of at least two years there will be no forced redundancies as a result of this merger.

Both brands will continue to operate and provide the exceptional customer service that they do today. Each will continue to grow and support more customers.

The merger will support both brands to be highly competitive in the market. Customers will always have the right to select the product that best suits their needs.

A Memorandum of Understanding (MoU) is a formal agreement between parties. It’s a preliminary written agreement outlining what the parties have negotiated to date, including common goals and responsibilities, and a commitment to investigate certain matters – such as the commercial and customer benefits of a merger in this case.

Due diligence is a review of a business undertaken by a prospective partner to establish where there are areas of opportunity and strength, and where there might be risks, and evaluate the commercial and customer benefits that may be obtained from a transaction.

In this instance, the information collected during due diligence will be used to determine if the proposed merger is in the best interests of the members of both Newcastle Permanent and Greater Bank, as well to support the future planning of the combined entity.

 

Newcastle Permanent and Greater Bank are both customer-owned banking institutions (known as mutuals) and this won’t change.

In the mutual model, customer interests are not in conflict with shareholder interests. Being solely customer focussed means all profits are used to benefit our customers and are delivered back into highly competitive products and rates, responsible lending, outstanding customer service, and a commitment to supporting local communities.

While Greater Bank is a mutual bank and Newcastle Permanent is currently a building society, we are regulated in the same way by the Australian Prudential Regulatory Authority (APRA) and are both authorised to use the word “bank” in relation to our businesses.

This is not a takeover by either party. This is a merger of equals where we are choosing to come together as two highly successful, financially strong Hunter-based organisations, to position our region as a financial powerhouse in Australia.

This is a strength-to-strength deal and a merger of equals. We are two of the financially strongest mutuals in Australia.

As a merged entity we would have $19.8 billion in total assets and become one of Australia’s largest mutuals.

Newcastle Permanent Charitable Foundation will continue to support the charitable sector as it has since 2003, and Greater Charitable Foundation will also continue to support the charitable sector as it has done since 2011.

As a merged group, we’ll consider how to operate both foundations and continue to support the tremendous impact and difference they provide to charities and the community.

* Total assets based on each entity’s unaudited management accounts as at 30 June 2021.