Kia ora and welcome to this interest.co.nz live blog.
Heartland Group Holdings is holding a special shareholder meeting this afternoon to discuss its proposed $620 million takeover of TSB.
Heartland and TSB say the combined entity – TSB Heartland Bank – will create a New Zealand “challenger bank of scale” with a regional focus.
Bank mergers don’t happen very often in New Zealand, so interest.co.nz will be live-blogging the proceedings of the special meeting, held at Auckland’s Eden Park and streamed online.
As a dual-listed company on both the New Zealand Stock Exchange (NZX) and the Australian Securities Exchange (ASX), Heartland is holding this meeting to try and obtain shareholder approval for the proposed deal.
Throwing a potential curve ball into the proposed deal, the Reserve Bank last week said it had asked TSB to get an independent report after TSB identified and reported issues to the prudential regulator on how it calculates and reports its regulatory liquidity and capital ratios. TSB has hired Deloitte to do the report.
Heartland is seeking votes from shareholders on the following four resolutions:
- Resolution 1: The proposed acquisition by Heartland of all TSB shares on issue from Toi Foundation, and the subsequent merger of Heartland Bank and TSB
- Resolution 2: The issue of 200 million Heartland shares to Toi Foundation as part of the consideration for the Proposed Transaction
- Resolution 3: The appointment of a Toi Foundation nominee (Mark Darrow, current Chair of the TSB board of directors) to the Heartland Board
- Resolution 4: An increase to Heartland's annual fee pool available for director remuneration
According to Heartland, Resolution 1 is a special resolution and needs a minimum of 75% approval from the votes cast by Heartland’s shareholders. Resolutions 2 through 4 are standard resolutions and require approval by a majority of 50% or more to pass.
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3:21pm
“The merged bank would have a broader and more balanced loan book,” Dixson says. “Residential lending through home loans and reverse mortgages would be the largest component, constituting approximately 65% of gross finance receivables. This would be complemented by motor finance, commercial property lending, rural lending and business finance.”
3:20pm
Tomlinson has finished up his speech and Heartland Group Holdings CEO Andrew Dixson has jumped up to speak. He says on a pro forma basis, TSB Heartland Bank would have approximately $15.1 billion of New Zealand assets, increasing the New Zealand asset base by approximately 171%. When including Heartland Bank Australia’s assets, TSB Heartland Bank would have $18.3 billion in total assets.
3:16pm
Tomlinson says the Taranaki region’s connection with TSB will remain an important part of the merged bank’s identity. A Taranaki community group tried to block the proposed sale of TSB to Heartland Group in August, but the attempt to injunct the sale failed.
Post-takeover, Tomlinson says Taranaki will continue to have a customer banking hub, including a local branch network and local customer roles. He doesn’t say whether any roles in Taranaki will be cut.
3:14pm
Tomlinson describes Heartland Bank as having built “specialist product expertise”, whereas TSB brings “established everyday banking capabilities, together with an efficient funding base.”
“TSB Heartland Bank would be regionally focused. TSB was established in Taranaki in 1850. Heartland’s origins trace back to Ashburton in 1875, and Canterbury remains an important part of our identity, employment and customer base. These histories would form an important foundation for the merged bank,” Tomlinson says.
3:12pm
Scale is important in banking, according to Tomlinson. “It supports investment in technology, customer service and risk management. It also creates a stronger platform to provide increased competition and choice in a market dominated by larger banks,” he says.
3:10pm
Heartland Group Holdings chair Greg Tomlinson takes to the stage. He tells the room that the board has “carefully considered” the proposal and unanimously supports it.
“The proposal brings together two established New Zealand banks with different strengths, strong regional histories and a shared commitment to customers. It would create a bank with approximately $15 billion in New Zealand assets and the scale to compete, invest and respond to customers’ changing needs,” he says.
3:05pm
Heartland Group Holdings' share price on the NZX was $1.26 per share when the meeting began this afternoon.
Pheobe Gibbons, the chief legal officer of Heartland Bank, has opened the meeting. She is discussing what attendees can expect from the meeting and introducing those on the stage.
2:57pm
The shareholder meeting staples are all here: a sea of grey hair, lots of suits and some beige background music.
While the World Cup Lounge can apparently fit up to 950 people, interest.co.nz’s finger counting puts the current number of people in the room at around 60. Heartland people are taking to the stage now to get settled in their seats.
2:52pm
As mentioned above, today’s meeting is a hybrid affair, held in-person at Auckland’s Eden Park in the World Cup Lounge and also livestreamed online. Interest.co.nz has arrived at Eden Park and can report that the meeting’s vibes are on the buzzy side as attendees trickle through the door.
Although the World Cup Lounge is equipped with its own private bar setup, Heartland is opting to present from a stage in the centre of the room rather than behind the bar. There are over 160 seats in front of the stage, with a chunk filled already.
Sequence of events
Here’s a timeline of the proposed deal so far:
June
- Heartland signs a deal with TSB's parent, the Toi Foundation, to buy TSB for $620 million
- Toi Foundation chairman says Heartland deal follows talks with multiple parties after an unsolicited approach in late 2024
- Heartland CEO says the proposed merger provides an opportunity for Heartland to scale its home lending portfolio
July
August
- Heartland CEO says it's no surprise there's interest in TSB from other parties after Kiwibank's parent company expresses interest in TSB
- Taranaki community group's interim injunction application against the sale of TSB to Heartland Group gets dismissed
- Heartland gets Toi Foundation trustee approval to buy TSB Bank
September:
- Heartland releases independent report that says TSB deal will lower Heartland's funding costs, helped by non-interest-bearing deposits in transaction accounts
- The RBNZ orders TSB to get an independent review of capital and liquidity ratios, Heartland says it will consider any implications for the proposed merger
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