Marac merger with building societies could go ahead this year
Marac’s planned merger with Canterbury Building Society and Southern Cross Building Society could be completed this year.
Friday, July 2nd 2010, 5:00AM
by Paul McBeth
CBS told investors at its AGM they can expect to vote on the proposal in November, while Southern Cross BS put forward December as a date for the merger to be completed when it wrote to stakeholders earlier this year. Though the firms have previously flagged the middle of next year for when a combined entity will apply for a banking licence.
The three firms are undertaking due diligence on a merger of the building societies, which would then be acquired by Marac, with an eye on becoming the country's first locally-owned listed bank.
That would complete Marac's goal of becoming a bank, which took a knock last year when Standard & Poor's cut its credit rating to a sub-investment BB+, below the Reserve Bank's required BBB- to get a licence.
S&P has already flagged a merged entity could have the potential to get an investment grade rating, and would likely speed up the process of consolidation in the sector.
CBS told its shareholders a merger would open up new funding options for the united entity, and give it the scale to increase its range of products on offer.
A merged entity would also be better able to cope with the tougher regulatory requirements for non-banks that are set to come into effect later this year.
Former ASB executive James Mitchell was appointed project manager to evaluate the proposal three weeks ago, and will lead the integration of the three firms if the bid goes ahead.
Last week CBS announced plans for a $100 million securitisation programme as a means to diversify its funding. CBS will sell residential loans to an entity called The Warehouse Trust, which will sell different classes of debt notes to selected institutions. Westpac will provide the facility to fund the programme, which will be the second launch of mortgage-backed securities in three years NZF Group put out an offer in May.
Paul is a staff writer for Good Returns based in Wellington.
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