P&N Bank will realise A$5 million savings from bcu once the two mutual ADIs merger in November.
P&N and bcu yesterday released merger documents to members, with votes set for late October on a plan that will form a mutual bank with $6 billion in assets, meaning it will be the eighth largest mutual ADI in Australia.
The new P&N Bank Board will comprise 10 directors, with Paul Gabb to continue as chair and Steve Targett from bcu as deputy.
Andrew Hadley will be CEO. Alan Butler, CEO of bcu, will leave the business, while all other bcu staff will retain employment.
The current brands of bcu and P&N Bank will be retained, "and an umbrella brand may be adopted in the future to create a model for further industry consolidation" an expert's report by Grant Samuel in the merger document for bcu makes clear.
The head office of P&N Bank will be in Perth, and the head offices of bcu in Coffs Harbour and Brisbane "will be retained as organisational hubs for the bcu business" of the new P&N.
No bcu stores or P&N Bank branches will be closed as a result of the merger.
The pro-forma net profit for the combined ADI for the half year to December 2018 was $1.03 million, compared with $22.8 million for the year to June.
In the short term margins may be lower, given P&N "has committed to use a material portion of the cost savings to remove banking fees on certain products [and] pay higher interest rates on certain P&N Bank transaction and savings accounts."
Retail deposits will represent 85 per cent of total funding.
As with most ADI mergers, economies of scale are central to the rationale for the union.
"While bcu's business should be sustainable in the medium term, it will face increasing pressures on a standalone basis," Samuel said.
"In particular, bcu's lack of scale and the requirement for ongoing investment in regulatory and mandatory technological change has meant that it does not have the necessary resources (staff and funding) required to develop and maintain an attractive banking offer (including digital)."
P&N, for their part, said 40 per cent of their investment spend has been on compliance and "mandated" projects.