Heartland Group Holdings’ chief executive isn’t surprised TSB is attracting interest from other potential suitors but says, at this stage, the proposed TSB-Heartland deal remains on track to be completed by the end of the year.
The Heartland group, which has banking operations in both New Zealand and Australia, signed a conditional merger implementation agreement with the Toi Foundation on June 1 to merge Heartland Bank and TSB Bank and create TSB Heartland Bank.
The proposed deal is valued at $620 million and, among other things, includes a $50 million pre-completion cash dividend from TSB. If the merger gets greenlit, Toi Foundation would hold a 17.5% shareholding in Heartland Group.
But David McLean, chairman of Kiwibank's parent company Kiwi Group Capital, has now expressed interest in having a conversation with TSB’s owner, the Toi Foundation, about a “potential tie-up” between TSB and Kiwibank.
McLean said Kiwi Group Capital believed in “building a stronger New Zealand-owned banking alternative” and the group wanted to engage with Toi Foundation and explore “what we could do together, but that would be at their discretion and following the outcome of the current process between TSB and Heartland.”
“I mean, TSB is a great bank, so I'm not surprised there's interest, though I'm not clear what is meant by a tie-up,” Heartland CEO Andrew Dixson told interest.co.nz on Thursday.
“Any questions on potential bidders in the process [are] for Toi Foundation to answer. So I'm not going to speculate any further on that.”
Asked by interest.co.nz if Heartland would consider walking away from the proposed deal if it became too complicated to pursue and look elsewhere, Dixson declined to speculate.
“I'm not going to speculate on potential outcomes, so, you know, we would inform the market if there was any change, but for now we remain focused on completing the transaction,” he said.
Dixson confirmed that getting the deal approved before the end of 2026 is still on target.
“At this stage, we remain on target for a 1 December completion,” he said. “We remain confident in the proposed merger, its strategic rationale and the benefits that we expect to be delivered from it.”
Questioned on how Heartland would go about appeasing disgruntled Taranaki residents if the proposed merger goes ahead, Dixson replied that Heartland respected the views of the community and the Toi Foundation’s engagement process.
Post-merger, Taranaki would remain a “key operational hub” for customer-based banking services, he said, including maintaining the local branch network and retaining customer-facing roles in the region.
“As we've stated, we recognise the importance of TSB to Taranaki's local identity, and we intend to preserve this through the principles that we've outlined for the proposed merger,” he said.
Part of the ‘Taranaki fabric’
The proposed $620 million deal is subject to the satisfaction of several conditions. These include community consultation by Toi Foundation with Taranaki residents and getting Heartland shareholder approval, as well as New Zealand and Australian regulatory approvals.
The proposed merger is being opposed by a group called the Taranaki Community Accountability Society (TCAS), which was established to try and halt the deal from going ahead.
An interim injunction brought by TCAS to stop Toi Foundation trustees from voting on the proposed sale of TSB to Heartland was heard on Thursday, the same day Heartland posted its annual results for the 2026 financial year.
The group has described TSB as “part of the fabric of Taranaki for generations” and wants to keep the bank under the ownership of the Toi Foundation, formerly the TSB Community Trust. Toi also holds a 66% stake in Fisher Funds Management. Dividends generated by these financial institutions fund the Toi Foundation’s philanthropic work.
During Thursday’s hearing, TCAS counsel Daniel Grove called the published information about the proposed merger from the foundation “misleading”, “one-sided” and “inaccurate.”
Toi Foundation counsel Justin Smith KC said the suggestion that information provided to the public was “one-sided” was not correct.
Justice Andru Isac, who presided over the hearing at the High Court in Wellington, reserved his decision and it's expected that a judgment will be released early next week.
Toi had to reopen consultation on the proposed merger in July after the charitable trust incorrectly calculated the timeframe of the initial public consultation by one day. The official closing date of the new submission period was July 14. Toi received 1203 submissions from the first public consultation round.
Foundation trustees are expected to vote on the proposal before the end of August. Toi Foundation chairman Chris Ussher told interest.co.nz in June that any decision to sell shares in TSB requires a resolution signed by not less than three-quarters, or 8 out of the 10 trustees.
Toi’s average dividend from TSB over the last five to 10 years has been in the order of $10 million per annum, according to Ussher. The total return Toi would expect to see from the Heartland investment, including the cash consideration coming out of it, is in the order of $30 million.
“So it's a $20 million uplift in our total income as a Foundation, which obviously then flows through in terms of the philanthropic work that the Foundation does in the Taranaki community,” Ussher said in June.
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