The Co-operative Bank's CEO says the RBNZ extending use of the word 'bank' to NBDTs may spur mergers

On the heels of Heartland Group Holdings' proposed acquisition of TSB, The Co-operative Bank CEO Mark Wilkshire says the Reserve Bank's decision to allow all licensed deposit takers to call themselves banks could spark more merger and acquisition activity.

Wilkshire says the Heartland-TSB deal makes sense given the two complement each other. That's because TSB has a retail/home loan focus and Heartland a business orientation. This means the combined bank would have a reasonably diverse portfolio, so Wilkshire says he can see the rationale for the deal.

He says Co-op has "no plans at this stage" to be involved in any merger or acquisition activity itself. The bank is in the middle of a core banking upgrade having decided "to invest for the future," Wilkshire says.

Being a co-operative "is pretty fundamental to our foundations as a point of difference," Wilkshire says.

"Being 100% customer owned and 100% New Zealand [owned] are core parts of our foundation. So we're not looking to move away from that."

Asked about SBS Bank, which is also a building society and thus also member owned, Wilkshire says the two have chosen their own paths.

"There are some similarities with SBS, but I think we've both chosen our own future directions."

In the industry more broadly, however, he sees scope for more tie-ups. Especially with the Reserve Bank saying all deposit takers it licences, including building societies, credit unions and finance companies, can call themselves "banks" from 1 December 2028.

Wilkshire notes some entities will face increased regulatory requirements, perhaps making the option of merging more attractive, or necessary.

"I think there's potential for further consolidation there, but there's nothing that I'm aware of."

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