SBS, with assets of around NZ$2.6 billion ($1.8 billion), said it had agreed a merger with HBS, a building society in the Hawke's Bay region on the east coast of the North Island with assets of NZ$185 million.
'The merger will allow us to take a further step toward being a fully national, mutually-owned community bank,' SBS chief executive Ross Smith said in a statement.
The two groups are each owned by their respective depositor-members, and HBS members would join the SBS if the merger is approved.
SBS, which is based in the Southland region of the South Island, became a bank in October 2008 and is the smallest of New Zealand's 19 registered banks.
The SBS-HBS merger would take effect on Oct. 1 if approved.
The retail banking sector is dominated by four large Australia-owned banks, ANZ-National Group, Westpac , National Australia Bank, who owns the Bank of New Zealand and Commonwealth Bank of Australia who owns ASB.
There are two other small New Zealand-owned retail operations -- the state-owned Kiwibank, based on the NZ Post Office network, and the regionally based TSB Bank, which has a small retail network.
New Zealand investment and finance company Pyne Gould Corp last month said it plans a merger with two savings firms to form a retail bank. See
(Reporting by Gyles Beckford; Editing by Adrian Bathgate)
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