Heartland bank proposal highlights NBDT challenges

The independent report by Northington Partners and Cameron Partners on the planned merger between the Pyne Gould-owned Marac, the NZAX-listed Canterbury Building Society and the Southern Cross Building Society illustrates what a tiny foothold NBDTs have.

Out of about $497 billion financial system assets as at May this year, registered banks accounted for about $377 billion, or 79%, their report says. NBDTs accounted for about 3.4% with the remaining finance companies accounting for about $9.9 billion (that included the now collapsed South Canterbury Finance and Allied National Finance which had combined assets of $2.3 billion) and building societies and PSIS accounting for about $4 billion.

Of the about 40 survivors, the largest two are the ANZ Bank-owned UDC and PSIS which account for 17% and 12% respectively of the NBDT sector. Marac is third with 11% and, when merged with the two building societies, will become the largest NBDT player with 19% (while the merged entity intends to apply for a banking licence, that is likely to take at least another year).

Which means all the remaining players are positive minnows.