PFG merger plans disrupted

-Maria Scott

Friday 9th February 2007

Plans by ambitious Christchurch lender Propertyfinance Group to merge with listed building society CBS Canterbury have been disrupted by CBS's decision to discuss a merger with another local lender.

CBS has announced that it is in merger discussions with Canterbury's Loan & Building Society, (LBS) also listed on the NZAX.

LBS approached CBS after Propertyfinance Group announced its desire last month to collaborate with CBS. Propertyfinance surprised the stockmarket and the lending industry by taking a stand in the stock market to buy up to 19.9% of CBS's shares. Propertyfinance has built a stake of just over 11% since then.

PFG said when it announced its move on CBS that consolidation in the industry was inevitable because of Government plans to regulate non bank lenders. CBS said that LBS had approached it because of its concerns about the implications of a deal between CBS and Propertyfinance.

A merger between CBS and LBS would create an organisation with assets of about $520 million.

In a joint statement, Graham Kennedy, chairman of CBS and George Brown, chairman of LBS said: "Looking ahead, both organisations are excited by the synergies that could be achieved if they combined as one very strong regional banking services business."

"These synergies and cost efficiencies flowing from streamlined compliance should provide ongoing benefits to shareholders."

The respective boards had appointed sub-committees to investigate the benefits of a merger. Independent consultants would be appointed to assist.

David Street, chief executive of CBS said: "We anticipate that we would be putting something formally to shareholders in June or July."

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