Australian Mutual Bank and Community First Credit Union are pleased to announce the signing of a memorandum of understanding to explore a potential merger.
Australian Mutual Bank (AMB) and Community First Credit Union (CFCU) are very similar member and customer owned banks operating predominantly in the greater Sydney region of NSW. The histories of each institution include multiple mergers and over 60 years of unwavering focus on the communities they serve.
Both institutions have identified the opportunity for significant member benefits to be derived through bringing two-like minded organisations together. With AMB having $1.8 billion in assets and CFCU $1.3 billion in assets, the potential merger will create a new entity with significantly more resources, and with greater profitability and asset growth opportunities than either institution can create by itself in the short term.
The merger is subject to due diligence, regulatory and member approvals, and therefore if approved, is not expected to proceed until early 2024. In the meantime, it will be business as usual with no changes to your banking and loan accounts.
We’re very excited about the proposed merger that has the potential to create substantial value for our members. The new and expanded mutual bank will be capable of delivering greater benefits to members such as an optimised store network, enhanced products and services and greater investment in things that help bring greater value and convenience to your banking.
If the merger doesn’t proceed, AMB and CFCU will continue to serve the needs of existing members and pursue separate strategies for future growth.
FREQUENTLY ASKED QUESTIONS (FAQs)
Why is each institution considering a merger?
A merger allows AMB and CFCU to create a more significant Sydney-centric customer-owned bank more quickly than either institution could achieve alone. Even more significantly, the merged bank will be able to release benefits to members by removing duplicated products and suppliers, as well as the accelerated introduction of new products and services. Each institution highly regards these additional benefits.
What each institution brings to the merger
AMB is a member and customer owned bank that has created a valuable social proposition around its B Corp certification, Climate Active carbon neutrality, Australian Mutuals Foundation and its relationship with Barnardos Australia. AMB’s pricing approach provides for fee-free ‘everyday’ transactions, and the same variable home loan pricing for new and existing members.
CFCU is also a member and customer owned bank with an equally valuable social proposition built around supporting long-term partners that benefit the community such as the McGrath Foundation, the Prostate Cancer Foundation, and National Seniors intertwined into its customer value proposition (through low-rate visa cards).
CFCU can leverage AMB’s Environmental, Social, and Governance (ESG) credentials and AMB can share the benefit of CFCU’s growing green loan portfolio and award winning credit cards.
At $1.8 billion in assets, AMB is a highly capitalised and liquid financial institution with over 21% capital adequacy and is about to embark on new digital capabilities and growth opportunities following its recent merger.
At $1.3 billion in assets, CFCU is adequately capitalised at over 15% capital adequacy and adequately funded. Community First has experienced a surge in demand for their home loans over the last two years and welcomes the opportunity that the merged entity would bring in being able to meet this demand.
CFCU also operates the Easy Street Financial Services brand, an on-line and contact centre brand for consumers who do not need the services of a physical distribution model.
AMB are currently considering their on-line distribution options and the opportunity to avoid duplication and optimise future investment options is compelling.
What happens next?
The Boards of both institutions will conduct relevant external due diligence before Christmas 2022 and then complete a review of policies, procedures, and systems in the new year.
Subject to there being no significant due diligence issues, it is anticipated that management will submit the relevant prudential requests to the regulator in the first half of 2023.
Also, based on current timelines, we expect that members will be asked to consider the merger proposal at a Special General Meeting early in 2024.
What will happen to staff in each institution?
There will be no forced redundancies as a result of the merger. Consultation will occur with all staff and positions comparative in nature will apply in the new organisation.
Mark Worthington, AMB’s current Chief Executive Officer (CEO), will become Chief Executive Officer of the merged entity from the time the transfer of business comes into effect. The CEO of CFCU, John Tancevski will become a fixed-term consultant to the merged entity and assist in the merger process subject to the terms of his contract of employment.
How will the Board be comprised?
The Board of the newly merged entity will be comprised of four representatives from AMB and four representatives from CFCU. This board configuration will enable both businesses to maintain stability and continuity throughout the process.
The current Chair of CFCU, Stephen Nugent, will become Chair of the merged entity.
What will the new organisation be called and what systems will we use?
Australian Mutual Bank members have undergone several name changes in recent years due to mergers with Select and Encompass Credit Unions to become Endeavour Credit Union. More recently there was a merger with Sydney Credit Union that resulted in the formation of Australian Mutual Bank.
The new merged organisation would therefore use the “Australian Mutual Bank” name to minimise further disruption to AMB members. However, the merged Australian Mutual Bank will continue to act as a Community Bank and put the communities it serves first in any decision making. Community First Credit Union is currently changing its branding to Community First Bank to reflect more contemporary practices.
AMB and CFCU use the same core banking software systems and cloud service businesses. Therefore, management will identify the best options moving forward to minimise any disruption to both sets of members.
Where will the head-office staff and registered office be located?
AMB and CFCU use hybrid and flexible working environments to offer staff more choices in their employment options. AMB’s 59 Buckingham Street Surry Hills NSW will be the registered office for the new entity. Other office locations will likely be maintained into the future, subject to members’ needs.
Will branches and stores be maintained?
AMB’s branches and CFCU’s stores have minimal overlap and offer choices for the new entity’s distribution strategy to optimise its physical resources and invest in enhanced digital banking services.
What happens if the merger does not proceed?
If the merger does not proceed, AMB and CFCU will continue to serve the needs of their existing members and pursue their individual strategies for future growth. However, this growth is likely to occur more slowly than the combined entity could achieve.
