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Combined Building Society sees no material financial impact from Christchurch earthquake

Combined Building Society sees no material financial impact from Christchurch earthquake

The CEO of the Combined Building Society, whose Marac Finance unit suffered the tragic death of four staff in the February 22 Christchurch earthquake, says the group has so far not identified any material financial impact from the quake.

In Marac's latest investor newsletter, Combined Building Society CEO Jeff Greenslade also says the group expects to be able to apply to the Reserve Bank for bank registration in the second-half of 2011. This is a slight change from previous comments which have targeted application in July this year.

The Combined Building Society was formed in January through the merger of Pyne Gould Corporation subsidiary Marac, CBS Canterbury and the Southern Cross Building Society with the ambition of ultimately becoming a bank. International credit rating agency Standard & Poor's awarded the Combined Building Society a BBB- credit rating in January, the lowest of its investment grade ratings. An investment grade rating is seen as a key plank of any bank licence application.

In the newsletter Greenslade says about 13% of the Combined Building Society's lending is in Christchurch with the bulk of this fully insured residential and commercial property loans. It has 28% of its net receivables in the Canterbury region and 38% of its depositors and debenture holders there. See more detail here.

"At this time the board has not identified any material financial impact from the earthquake, however our analysis is ongoing and we will continue to update you," Greenslade wrote.

"We have spoken to Standard & Poor's since the earthquake who have confirmed Combined Building Society's investment grade rating and stable outlook and that no immediate rating action is planned," Greenslade added.

"We expect to be able to apply for banking registration in the second half of 2011."

He said the immediate priority was to establish a new name and brand identity for Combined Building Society. This would aim to capture the heritage and character of the three merger partners.

The ultimate plan is for a Christchurch headquartered "Heartland Bank" that will aim to double its NZ$2.2 billion asset base within five years through growing family, small business and agricultural lending.

Combined Building Society is covered by the extended Crown retail deposit guarantee scheme until December 31 and listed on the sharemarket on February 1. Combined, the group has more than 91,000 borrowers and investors.

Pyne Gould Corporation, which also lost 10 staff from its Perpetual Group subsidiary in the earthquake and saw other staff seriously injured, has established the PGC Earthquake Fund as a charitable trust to help and support the people, children and families affected by the collapse of the Pyne Gould Corporation building during the quake.


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