Mutuals announce merger intentions – what’s in store for consumers?

Customer-owned banks, Summerland Bank and Regional Australia Bank, have announced the signing of a memorandum of understanding (MoU) to signal the intent for a merger to expand the reach and market share of the organisations in regional Australia.

Founded in 1964, Summerland Bank is based out of the Northern Rivers region of NSW and employs over 120 individuals from the local community across its Lismore headquarters.

Regional Australia Bank operates across 37 branches in regional NSW, including the New England North West, Central West, Mid North Coast, and Greater Newcastle regions.

Should the merger materialise, this would mark the second merger for Regional Australia Bank following the finalisation of its merger with Macquarie Credit Union in April 2024.

Speaking to Broker Daily, Summerland Bank CEO John Williams highlighted how this merger would benefit regional Australians: “The potential merger between Summerland Bank and Regional Australia Bank marks an exciting opportunity for regional Australians.

“By uniting together, we will enhance our ability to invest in infrastructure, security, compliance, and innovative digital solutions.

“This partnership would not only allow us to combine our resources but also broaden our reach, and provide more branches and improved services within regional communities.

“Our customers will also benefit from the combined expertise of two customer-owned, community-focused banks with deep regional roots. Together, we aim to deliver more personalised in-branch banking experiences alongside advanced digital services, all tailored to meet the specific needs of regional Australians.”

Along with this, Williams told Broker Daily that the merger would strengthen regional banking by increasing the presence of customer-owned alternatives and enhancing competition in the market.

“Together, Summerland Bank and Regional Australia Bank will be better positioned to offer more competitive pricing and improved customer experiences, resulting in greater value and more choice for customers in regional areas,” Williams said.

Commenting on the merger, CEO of Regional Australia Bank, David Heine, said the bank is “pleased to begin merger discussions with Summerland Bank” as it strives to fulfil the purpose of “becoming the trusted bank for all regional Australians”.

“Our commitment to investing back into our regions, responsibly and sustainably, remains unwavering. The team at Summerland Bank provide a shining example of regional community service,” Heine said.

“Our shared values and ambitions are sharpened through the union of two like-minded mutuals. This merger confirms our intent to empower all regional Australians through our customer-owned banking services.”

Both organisations have entered the due diligence process on the operations of each other during October and, if no concerns are found, the applications to the regulators (APRA, ASIC, ACCC, and ATO) will occur.

The customer base of the lenders is expected to grow to over 130,000, with around 47 branches and combined assets of $4.8 billion if the merger takes place.

Broking industry weighs in on mergers

Founder and director of Broker Essentials, Jason Back, told Broker Daily that mergers such as these can have “mixed outcomes” for consumers.

“On the one hand, mergers can create efficiencies within the banks (code of decreasing costs to increase shareholder return), allowing them to offer more competitive products or improved technology,” Back said.

“This could potentially benefit customers in terms of better service or more competitive rates. However, there’s always the risk that reduced competition from mergers could limit consumer choice, especially in regional areas where there are fewer financial institutions.

“This can mean less pressure on banks to provide competitive pricing or tailor services to specific community needs. It also makes it even harder for the mutuals that are left, to be competitive against even larger organisations.”

He said that key to any merger being beneficial “lies in the execution” and can result in long-term benefits for consumers if the combined entity focuses on “consumer-centric innovations – such as enhanced digital banking tools, customer service, or unique financial products”.

“They are generally good at talking up the benefits of merger, but let themselves, their staff and customers down when the rubber hits the road!” Back said.

In regard to competition, Back told Broker Daily that mergers can “often consolidate power within the industry” that could potentially be a hindrance for “smaller players or the competitive landscape”.

“Larger institutions may have more resources to dominate the market, but they may lack the flexibility or personal touch that smaller, more agile lenders or brokers offer,” Back said.

“For mortgage brokers, it’s essential that mergers don’t lead to a reduction in choice for consumers. A healthy mortgage market thrives on competition, particularly when smaller and regional banks play an active role.

“If these mergers result in fewer products or less innovation, consumers could lose out. However, it can also create opportunities for brokers to step in as the go-between, ensuring that consumers still have access to the best mortgage options despite any consolidation in the banking sector.”

Speaking to Broker Daily, Aaron Christie-David, mortgage broker and founder of Atelier Wealth Mortgage Brokers, said he believes that consolidation among smaller challenger brands is “a smart move” when combining resources and gaining the ability to compete for market share.

“Taking the context of these two brands, there are so many opportunities that provide synergies such as combining marketing teams, credit support, technology, and sales distribution,” Christie-David said.

“The benefit to consumers is when brands like these merge [they can] better serve their existing clients by being sharper on retention and support. For new clients, the benefits include being part of a larger banking organisation which you hope can mean lower rates and fees.”

Christie-David further said that he’s a “big fan” of seeing businesses merge and “create a super brand”.

“This means the brands get a freshen up, they have more resources to grow, their shared systems allow for smoother processes and ultimately the consumer should be the beneficiary of this merger,” he said.

“Competition is not based solely on lower rates, it could be they have unique products to serve a niche or market segment better. If you look at what the team at Flint has done in the mortgage space with the launch of their agribusiness arm, you can certainly see they are bringing more competition and energy to these borrowers.

“I often refer to how Bankwest has successfully been able to keep its brand essence of being a challenger despite being owned by Commonwealth Bank and their service offering with more digital solutions is fantastic for their broker customers and home loan customers too.”

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.