Some 98% voted in favour of the proposal, and the building society will be folded into the bigger SBS. The deal is expected to be completed in early October, and will see HBS members become members of SBS. The merged entity will have some $2.8 billion worth of assets on its books.

HBS chairman Frank Spencer said the reality for non-bank deposit takers is that they face onerous rules from December, when the Reserve Bank's prudential requirements come into effect, and that joining a bank gave the institution's members much more security in financial sector that has struggled for the past three years.

"We're strong at the moment, but one of the reasons why we've done this now is that the deposit war is going to hammer us, and regulation increases our operational costs and squeezes our margins," Spencer said.

The access to new products was also a major factor for HBS, which will very much be the minor partner in the merger, adding $185 million worth of assets to the new entity.

"Right now we offer two things, mortgages and savings interest - to appeal to future generations we need these products," Spencer said.

The deal is one of a growing number of bids to consolidate the non-bank deposit taking sector, which was dealt a major blow in recent years after the collapse of the property market pushed more than 50 finance companies over the edge.

Under the merger, all staff and management will be retained, and the HBS brand will continue.