SBS Bank boss won't rule out potential for merger with TSB; Plans first commercial paper programme

SBS Bank boss won't rule out potential for merger with TSB; Plans first commercial paper programme

By Gareth Vaughan

SBS Bank, which sees last year's takeover of the Hastings Building Society as its first step towards creating a national community bank along the lines of the old Trust Bank model, says it would be open to getting into bed with TSB Bank if the circumstances were right.

SBS CEO Ross Smith told interest.co.nz that although SBS had now fully integrated the Hastings Building Society, it wasn't currently in talks with any other entities about joining forces.

"But all the other players in the market know we'd be receptive to discussions so we'll just sit and wait and see what their demands are," Smith said.

He has previously said that both the Nelson and Wairarapa building societies would be “ideal” partners and co-operative PSIS was a potential partner. And asked about the possibility of a merger with TSB, Smith didn't dismiss the idea.

"If circumstances are appropriate for us to get into bed with the likes of a TSB, then we certainly would be open to discussions with them," Smith said. "But it's not on the agenda at the moment and we don't have any plans in that regard."

"But they're very similarly aligned to us and I guess if the economic climate changed dramatically, and that forced us and them to think of these options, then maybe it is an option. But we're certainly not in discussions with them at the moment, no."

As of March 31, TSB had total assets of NZ$4.8 billion and SBS NZ$2.8 billion. Both had gross loans of NZ$2.6 billion.

TSB's latest annual results showed profit down NZ$11.3 million, or 22%, to NZ$39.8 million. SBS' March year net surplus fell NZ$787,000, or 5%, to NZ$14.250 million.

TSB CEO Kevin Murphy told interest.co.nz last year that his bank was "fiercely” independent and intended to remain so. And PSIS CEO Girol Karacaoglu recently all but ruled the co-operative out of any merger with another New Zealand financial services provider because none of them were co-operatives and he would be unwilling to give up co-operative status.

Meanwhile, SBS general manager for finance, Tim Loan, said the bank would launch its first commercial paper programme next week. He said the NZ$100 million programme would be aimed at domestic institutional investors. SBS was, however, unlikely to issue the full amount over the next few months given it doesn't really need the money.

"We're really just looking at it from a perspective that it's better to have a number of arrows that we can fire when we require them," Smith said. "We don't need the funding right at the moment but it just gives you more ammunition should times get difficult."

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