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Wednesday 21st July 2010 |
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Canterbury Building Society dropped more hints on the proposed merger to form a South Island bank, telling shareholders they can expect a vote in mid to late-November.
The merger with Southern Cross Building Society and Pyne Gould Corp.’s Marac unit is undergoing due diligence, and more announcements are likely next month, according to CBS’ AGM presentation slides posted on the NZX website. A banking licence would increase funding options for the new entity and provide scale to boost the range of products on offer, the company said.
The merger would create a lender with $2.2 billion of assets and accomplish Marac’s goal of becoming a registered bank. Marac’s aspiration was dented last year when its credit rating was downgraded to a speculative BB+, below the Reserve Bank’s minimum investment grade rating.
Former ASB executive James Mitchell was appointed project manager to evaluate the proposal three weeks ago, and will lead the integration of the three firms if the bid goes ahead.
CBS told shareholders the merger would boost its scale and improve profitability as the finance sector goes through a period of consolidation after its collapse over the past few years. The deal would also help ease the burden of tougher regulatory requirements for non-bank lenders that will squeeze profit margins as entities are forced to hold more cash in reserve.
Last week the building society announced plans for a $100 million securitisation programme as a means to diversify its funding. CBS will sell residential loans to an entity called The Warehouse Trust, which will sell different classes of debt notes to selected institutions. Westpac will provide the facility to fund the programme.
The shares last trade at $2.75 on July 13, and have tumbled 25 cents since the merger was first announced at the start of June.
Businesswire.co.nz
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CBS Canterbury looks to bonus share issue before proposed bank merger
