Banking has changed significantly in the past decade.
New banking regulations have brought more layers of complexity and compliance. Consumer demand for enhanced digital banking and security is increasing at pace. Examples this newspaper referred to as "form[s] of pressure" when talking about how "the industry is changing dramatically" (NH, 13/10/21).
These developments are important. They ensure the customer's best interests are paramount and that the industry is held to account.
However, they come at considerable cost and stretch resources, putting increased pressure on smaller regional organisations like ours.
Greater Bank and Newcastle Permanent have always punched above our weight against the bigger players in this market. But continuing to compete in this changing environment requires size, scale, adaptability and organisational resilience.
Over the past decade, industry consolidation has seen the number of customer-owned banks in Australia almost halve. The financial regulator, APRA, has indicated its support for consolidation, and last week the Federal Treasurer approved merger proposals involving four of Australia's top-ten mutuals. Further, according to analysis performed by KPMG in 2021, a quarter of Australian mutuals anticipate being involved in a merger this year.
Today is historic for our two Hunter-based customer-owned financial institutions as we open voting on the merger proposal. We believe merging is the way forward in the long term. And if not now with each other, then we'll need to look at options for other partners. Other options, however, may not provide as many benefits to our employees, members and communities. If either of us was to pursue a different partner, they would probably be headquartered elsewhere in Australia, meaning jobs may move outside the Hunter and may also impact the $4.5 million invested each year by Newcastle Permanent, Greater Bank and our respective charitable foundations.
There are many reasons we believe merging now is the right move, but one critical reason is the role our organisations play in the region's prosperity.
Through merging and becoming larger, we can drive growth and a greater contribution to our regional economy. We can remain true to our purpose of helping more local people into a home. We can ensure the skills and expertise, jobs and investment stay here.
This merger has the unanimous support of both boards (subject to there being no superior proposal). We're voting in favour and encourage eligible members from both organisations to do the same.
Wayne Russell is chair of Greater Bank and Jeff Eather is chair of Newcastle Permanent
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