By Gareth Vaughan
SBS Bank's takeover of the Hastings Building Society (HBS), which it sees as its first step towards creating a national community bank, valued the Hawkes Bay entity at NZ$15.3 million.
This acquisition value, or deemed consideration, is revealed in SBS Bank's General Disclosure Statement (GDS) for the six months to September which was released just before Christmas. The valuation incorporates advances to customers of NZ$143.9 million, redeemable shares valued at NZ$163.2 million and cash of nearly NZ$3.6 million. SBS notes in the GDS, however, that the valuations are incomplete and provisional and may therefore be adjusted.
In the six months to September 30, 2010 HBS produced revenue of NZ$6.25 million and a net surplus of NZ$229,000.
SBS's acquisition of HBS occurred on October 1 last year after HBS members voted overwhelmingly in support of the deal on August 31. The takeover has seen HBS members become members of SBS.
SBS, which is also a building society and gained a banking licence in October 2008 with the intention of becoming a national banking player, sees the HBS deal as its first step towards creating a national community bank targeting the space that used to be occupied by regional trust banks. SBS Bank's CEO Ross Smith says the plan stems from a view that the country needs more New Zealand owned banks.
Smith sees other mutually owned building societies such as the Nelson and Wairarapa building societies and even co-operative PSIS, as potential merger partners. See Double Shot interview with Ross Smith here.
Ex-HBS chairman Frank Spencer has been appointed to the SBS board. Spencer described HBS becoming part of a registered banking group as "the pot of gold at the end of the rainbow."
The SBS-HBS merger agreement sets out that all staff and management in HBS’s Hastings and Napier offices will be retained with the HBS brand also remaining. There’s also a guarantee for community contributions to rise from about NZ$60,000 in 2009 to at least NZ$100,000 per annum over the next five years.
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