Swan Hill Credit Union is the latest non-major lender to announce it’s considering a merger with a bigger player – in this case, Bankmecu.
The news follows the release of a KPMG survey earlier this week, which found 90% of those working in the sector believe the industry will shrink to less than 80 institutions over the next five years, down from 106 at the latest count.
According to The Australian, a ‘wave’ of mergers such as the one being considered between Swan Hill and Bankmecu, as lenders seek to compete with majors and offset mediocre loan demand.
Swan Hill’s board members announced at a recent meeting that they see the potential merger as an opportunity to “increase the value for customers and staff over the long term”.
“The board believes that the needs of the customers of Swan Hill Credit Union may be better met by them being part of a larger but like-minded customer owned banking institution which can meet the many challenges faced by smaller financial institutions such as the increasing burden of regulation,” says a spokesperson.
A process of due diligence has now started, after which the board will make a decision about whether to recommend the merger to members. The final decision is likely to be made early next year.
Swan Hill says it has “much in common” with Bankmecu, inclduinga strong commitment to customer value and maintaining high levels of personal service.
“While the bank operates across Australia, the majority of its business is in Victoria and its operations are split between Melbourne’s metropolitan region and regional Victoria.
Bankmecuhas operations in VIC, SA, ACT, NSW and QLD, has around 125,000 customers, $3 billion in assets and capital of more than $342 million, making it one of the country’s strongest mutually owned financial institutions.
Other mergers this year include Alliance One Credit Union and Community CPS (who combined become Beyond Bank) and Bankmecu’s acquisition of the Fitzroy and Carlton Community Credit Co-operative.