Consolidation of Mutual Banks in Australia
The Australian mutual banking sector is on the brink of a significant transformation. The top ten mutual banks now account for 75% of mutual banking and credit union system assets, a clear indication of their dominance in the sector. With an increasing appetite for mergers, the landscape of mutual banking in Australia is set for an inevitable consolidation. A report by Banking Day suggests that the sector may be condensed to fewer than 20 mutual banks, and subsequently, to fewer than 10, potentially even down to five by the early 2030s. Here
Merger Scenarios and Potential Partners
The decision of Police & Nurses Limited (P&N Bank) to abandon a proposed merger with Great Southern Bank has prompted other banks to consider potential merger scenarios. Both P&N Bank and Great Southern Bank are now back in the market, seeking lucrative partnerships. Six months ago, P&N Bank had called off a merger with Beyond Bank, a partnership that may now be revisited. However, there’s speculation that a merger between Teachers Mutual Bank in Sydney and Perth-based P&N Bank may be a more appealing option.
Rumours of Consolidation
Great Southern Bank’s re-evaluation of its merger options could potentially trigger the next wave of consolidation in the sector. The bank shares considerable overlap with People First in Queensland and Queensland Country Bank. Interestingly, there have been rumours of a potential merger between Armidale-based Regional Australia Bank and Queensland Country Bank. If this does come to fruition, it could prove to be a strategic move for both banks.
Looking South
In light of these developments, Great Southern Bank may need to look south for potential merger partners. An alliance with Adelaide-based Beyond Bank could be on the cards. Alternatively, the bank may consider partnering with one of the two former building societies in the list; Newcastle Greater Mutual Group or IMB Limited, the latter based in Wollongong.
Future of Mutual Banks
While the future of mutual banks in Australia appears to be headed towards consolidation, it remains to be seen which of the top 10 banks will continue to exist in the long run. Regardless of the outcome, it’s clear that each of these banks envisions their institution as part of a larger and more successful mutual bank in the future. In the meantime, the conjecture centres on the future paths of P&N Bank and Great Southern Bank.
This consolidation trend within the mutual banking sector is set to redefine the banking landscape in Australia. With fewer, but larger, mutual banks, the sector will likely become more competitive and dynamic, offering a broader range of services and products to its members.
