Heartland extends TSB takeover deadline to March 2027 as TSB’s capital and liquidity ratios review is still ongoing and the Reserve Bank needs more time to assess the proposed TSB-Heartland merger

Heartland Group Holdings has announced that its proposed takeover of TSB Bank will not meet its initial deadline of December 2026.

The $620 million merger will now be completed by March 1, 2027, subject to satisfaction of the remaining conditions, according to an NZX market update from Heartland on Thursday morning.

“The revised target completion date reflects the remaining work required in relation to the Reserve Bank of New Zealand’s assessment of Heartland Group and Toi Foundation’s applications for the Proposed Transaction, and the TSB Section 95 review,” the company said.

“Heartland Group remains committed to completing the Proposed Transaction and creating a larger New Zealand challenger bank with a regional focus.”

The Reserve Bank (RBNZ) asked TSB in September to get an independent report after TSB identified and reported issues to the RBNZ on how it calculates and reports its regulatory liquidity and capital ratios.

TSB has advised the RBNZ it has appointed Deloitte to undertake the report. A draft report was due at the end of October and a final report is due to the RBNZ in November.

TSB's latest general disclosure statement, for the year to March 31, said an internal review identified an error in the calculation of its regulatory liquidity ratios: one-week mismatch, one-month mismatch and core funding. As a result, TSB said it has been non-compliant with a condition of its banking registration since 2010, when the liquidity requirements took effect.

TSB said in September that the report that the RBNZ has requested will provide “an additional level of independent assurance” as TSB prepares for the proposed merger with Heartland Bank.

Getting the RBNZ to put a stamp of approval on the deal was the last hurdle in the TSB takeover process. The merger was publicly announced in June, although deal discussions began a full 12 months earlier. Toi Foundation trustees backed the deal in August and Heartland shareholders approved the merger in October.

The takeover would see Heartland acquire all TSB shares on issue from its parent, the Toi Foundation, for $620 million. Immediately following the acquisition, Heartland Bank and TSB will merge via what’s been described as “a short form amalgamation” to create TSB Heartland Bank.