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Our Memorandum of Understanding (MoU)

The MoU sets out the key terms between Greater Bank and Newcastle Permanent to determine the commercial and member benefits that can be derived from bringing together our two locally grown organisations that collectively have $19.8 billion in total assets* and a combined customer base of approximately 600,000.

Both organisations independently have exceptional financial strength.

Our collective capabilities and capacity will allow us to invest more in technology and innovation, and offer great value for our customers.

Some key elements of the proposed merger on completion include:

  • Becoming one of Australia’s largest customer-owned financial institutions, serving a combined customer base of approximately 600,000 customers.
  • Preserving both iconic brands – Greater Bank and Newcastle Permanent.
  • Retaining a combined network of 100 branches for a period of at least two years.
  • Maintaining our customer contact centres and headquarters in Newcastle.
  • Employing more than 1,600 people with no forced redundancies as a result of the merger for a period of at least two years.
  • Increasing our ability to invest in new technologies and enhancements to the services we each offer our customers, which will enable us to deliver an exceptional customer experience and help even more Australians with their retail banking needs.

The MoU sets out a proposal for an aligned Board to govern the merged entity, with the retention of both existing CEOs to support the integration process and the acceleration of value to customers.

The MoU is the first step in this process. Completion of the merger remains subject to due diligence and then approval by members of both mutuals and regulators.

Subject to legal and regulatory clearances, the target date for the completion of the merger is early 2022.

For the merged organisation it is proposed:

  • Chair - Wayne Russell (current Chair of Greater Bank)
  • Deputy Chair - Jeff Eather (current Chair of Newcastle Permanent)
  • CEO - Bernadette Inglis (current CEO of Newcastle Permanent)
  • Deputy CEO - Scott Morgan (current CEO of Greater Bank)

See Newcastle Permanent's Memorandum of Understanding info here.

Answering your questions

 

Your banking

For now, this means no change at all for our customers.

We’re still in the very early stages and will continue to update you throughout the process. Should the merger be completed, post-merger you’ll continue to enjoy the great products and friendly service you’ve come to enjoy at Greater Bank.

This is a strength-to-strength deal and a merger of equals. We are two of the financially strongest mutuals in Australia. As a merged entity we would have $19.8 billion in total assets and become Australia’s largest mutual.

This total assets figure is based on each entity’s unaudited management accounts as at 30 June 2021; the financial results for each organisation will be formally reported in October 2021.

Both brands will continue to operate and provide the exceptional customer service that they do today. Each will continue to grow and support more customers.

The merger will support both brands to be highly competitive in the market. Customers will always have the right to select the product that best suits their needs.

As a customer, you will see no immediate change to your day-to-day banking. Both brands will continue to operate and customers will continue to enjoy the exceptional customer service they have had with one or both brands.

We do know that our collective capabilities and capacity will enable us to invest more in technology, and continue to offer great value for our customers.

About the merger

This is an incredible opportunity to create one of Australia’s largest customer-owned banks.

The merged entity will benefit from being part of a larger group by:

  • leveraging the current technology and other capabilities of both organisations to accelerate customer experience enhancements for both brands, and
  • combining the financial strength of both organisations to enable investment and major technology innovations and maintain highly competitive rates.

Additionally, the merged entity will retain both iconic brands.

Success in the banking sector is dependent on the ability to rapidly adapt, meet evolving customer expectations, and new regulatory requirements. Smaller organisations can be at a disadvantage in keeping pace with required investment in frequent and complex technology advancements; a decade ago there were circa 200 mutuals across Australia, today the number is fewer than 70.

A merged entity would benefit from a shared capability of both brands and increased capacity for investment and technology advancements, to deliver an exceptional customer experience and continue to be a significant competitor to major banks and the retail banking sector.

We’ve entered into a Memorandum of Understanding but, the merger process is still in early stages.

We have agreed that merging Greater Bank and Newcastle Permanent makes sense and we’re committed to exploring the commercial and customer benefits of bringing the organisations together.

We’re now going to undertake extensive due diligence which will determine if merging would be best thing for both sets of our members.

The final decision is made by our members, who would vote on the merger in 2022.

A Memorandum of Understanding (MoU) is a formal agreement between parties. It’s a preliminary written agreement outlining what the parties have negotiated to date, including common goals and responsibilities, and a commitment to investigate certain matters – such as the commercial and customer benefits of a merger in this case.

The MoU is useful as it ensures all parties, in this case Newcastle Permanent and Greater Bank, are on the same page in respect of key items that have been negotiated up to that point.

Due diligence is a review of a business undertaken by a prospective partner to establish where there are areas of opportunity and strength, and where there might be risks, and evaluate the commercial and customer benefits that may be obtained from a transaction.

In this instance, the information collected during due diligence will be used to determine if the proposed merger is in the best interests of the members of both Newcastle Permanent and Greater Bank, as well to support the future planning of the combined entity.

The merger proposal requires approval by the members of both Newcastle Permanent and Greater Bank.

Following an extensive due diligence period and necessary regulatory approvals, we are targeting a completion of the merger in early 2022.

Both organisations have strong foundations, with highly successful and iconic brands, and shared excellence in customer service.

We understand that each of our customers have a strong affinity to their brands and all of the things they love about their organisation.

As a merged entity, we think there is a tremendous opportunity to use each brand effectively to attract more customers to our offerings. 

Both organisations have attractive and complementary characteristics to each other and a merger of equals would provide significant value to customers, with improved technology and organisational capability and advantages of scale.

Both organisations are the financially strongest by capital ratios among the large mutuals, so this together with our complementary characteristics and connection with our communities makes us ideal merger partners.

This merger is about uniting two of the strongest customer-owned banks and provides an opportunity to drive transformational change to future-proof both organisations together – more so than can be done individually.

It will enable the combined organisation to carve out a presence as a beacon for the mutual sector and a significant challenger to the broader retail banking market.

Both organisations are financially strong and we each have exciting plans for growth independently.

This due diligence period is about exploring how we could grow even faster together.

If the merger does go ahead, in those first two years we'll be developing our future plans for growth and new services.

For now, we won't have all the answers, but our intentions with the merger are to serve our customers and our region even better.

And remember for now there will be no change for customers and both brands will remain.

Success in the banking sector is dependent on the ability to rapidly adapt, meet evolving customer expectations, and meet new regulatory requirements. In fact, a decade ago there were approximately 200 mutuals across Australia, today that number is fewer than 70.

So, it comes as no surprise to see other customer-owned institutions follow our lead in exploring possible mergers. The announcement between Heritage Bank and People's Choice has no impact on our plans to unite with Newcastle Permanent.

Our people and branches

A key goal of the merger is to create new opportunities to grow our combined business, expand our presence and enrich our offering to customers. This will in turn enable us to be a vibrant employer of choice and provide our people with new growth and development opportunities.

We will have more than 1,600 employees on merging, and as part of the MoU, we’ve agreed that for a period of at least two years there will be no forced redundancies as a result of this merger.

Both brands will be retained following the merger, and for a period of at least two years the combined network of 100 branches will be retained.

A key goal of the merger is to create new opportunities to grow our combined business, expand our presence and enrich our offering to customers.

This will in turn provide our talented employees with new growth and development opportunities, and strengthen the merged entity’s position as an employer of choice in the region.

Over time, the head office will be in Newcastle; we are proudly Newcastle-based.

The existing corporate offices of both organisations will be retained for the initial period following the merger.

Commitment to community

Newcastle Permanent Charitable Foundation will continue to support the charitable sector as it has since 2003, and Greater Charitable Foundation will also continue to support the charitable sector as it has done since 2011.

As a merged group, we’ll consider how to operate both foundations and continue to support the tremendous impact and difference they provide to charities and the community.

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* Total assets based on each entity’s unaudited management accounts as at 30 June 2021.

Featuring in the photo are: Greater Bank Chair, Wayne Russell, Newcastle Permanent Chief Executive Officer, Bernadette Inglis, Greater Bank Chief Executive Officer, Scott Morgan and Newcastle Permanent Chair, Jeff Eather.