Regional Australia Bank and Summerland Bank are coupling up.
In a move reflective of a broader consolidation within the Australian financial sector, the duo have formally agreed to merge their operations. The governing bodies of both member-owned banks have given the green light to the union, setting the stage for the creation of a larger banking entity focused on serving regional communities.
“This partnership represents a meaningful milestone in our ambition to be chosen by more regional Australians to be their bank," said David Heine, Regional Australia Bank's current chief executive officer.
The merger will combine Regional Australia Bank — with its network of 39 branches, mainly across New South Wales — with Summerland Bank, which has 10 locations, spanning from Grafton, NSW up to the Queensland border. The merged bank will have a combined $4.8 billion in assets and more than 130,000 customers. The anticipated completion date is July 1, pending regulatory clearances.
Heine will be at the helm of the new organization, serving as CEO, while John Williams, the current chief executive officer of Summerland, will take on the role of deputy chief executive officer of strategy. Michelle Edmonds will retain the role of deputy chief executive officer of customers.
The two banks said the new union will improve client services with new financial products and enhanced services, while also offering additional physical locations and digital platforms. In addition, the duo said the larger financial institution will allow it to make larger investments in local initiatives, as well as provide greater opportunities for employee advancement.
But the merger paints a picture of Australia's larger financial services sector. The tie-up between Regional Australia and Summerland occurs amid both Australia's growing M&A environment and the nation's reliance on mortgage brokers.
At present, approximately 76% of borrowers across the nation rely on brokers for financial advice. At the same time, while global M&A activity has been on a downward spiral since early 2022 — having fallen 26% between 2022 and 2023, according to S&P Global — Australia seems to be bucking the trend. Total deal volume rose 30% in 2024, compared with 2023, according to MergerMarket data.
Examples can be seen everywhere. Earlier this month, members of Bank Australia and Qudos Bank approved a merger. There's also Auswide Bank and MyState Bank Limited, G&C Mutual Bank and Unity Bank, Teachers Mutual Bank Limited and Australian Mutual Bank Limited, and People's Choice and Heritage Bank. But Australia's M&A market isn't limited to just lenders or banks. Brokerages are getting in on the action too.
"There's plenty of [M&A] activity," Chris Slater, who will soon join Recludo as head of strategic growth, told Australian Broker last month. The firm works to acquire Australian brokerages, helps them scale, and then prepares them for an eventual resale.
Adam Brown, National Australia Bank (NAB) broker distribution executive, agreed.
"We're seeing more consolidation of broker businesses, where they're coming together to create scale," Brown said. "We're seeing smaller [firms] join larger [firms]. We're seeing large and large [firms] come together. We're seeing independent operators creating umbrella businesses where independent operators are operating underneath. So they take a lot of different forms. But we are seeing that scale opportunity as being one that that many brokers are taking on.
"I look at it more as partnerships, more so than M&A," he continued. "In my mind, M&A triggers acquisition. In the broker space, there are businesses out there looking to acquire books. So the brokers that are looking to sell, they're people out there looking to build. So there's that as an opportunity. But there's also, if you're looking to grow, and you are looking to outperform in growth, one of those ways is to partner versus just organic. And we're seeing a lot more businesses partner."
With so much movement in the market at the moment, that means brokers need to stay agile and easily able to adapt.
In the case of Regional Australia Bank and Summerland, the two banks recommended that brokers continue to foster their established relationships and systems at each respective bank during the merger process. Over the next year and a half, the newly formed entity will work to integrate their technological infrastructure, service offerings and product suites. Brokers should proactively seek updates regarding any modifications to loan products, lending guidelines and procedural frameworks. In addition, the expanded branch footprint of the merged bank will offer brokers the chance to engage with new clients in regional areas, previously outside their immediate network.
