Greater Bank and Newcastle Permanent have announced that they have signed a Memorandum of Understanding (MoU) to explore merging the two organisations, to create the 'largest' customer-owned bank in the country.

Both banks currently have $19.8 billion in total assets, and have a combined 600,000 customers.

Both brands will remain separate entities, however.

This will place the new conglomerate alongside the likes of Great Southern Bank - formerly CUA - and Teachers Mutual Bank as the largest customer-owned banks in Australia.

The merged entity will employ 1,600 people, with no forced redundancies promised for at least two years.

Wayne Russell, Chair of Greater Bank, is forecast to be Chair of the merged entity.

Alongside him Jeff Eather, Chair of Newcastle Permanent, is said to become Deputy Chair.

Mr Russell says that both organisations already have "exceptional" financial strength.

"Our collective capabilities and capacity will enable us to invest more in technology and innovation, and offer great value for our customers," Mr Russell said.

Mr Eather said the merger will create a "large, forward-thinking financial institution that sustains the core principles of customer-owned banking".

Additionally, CEO of Newcastle Permanent, Bernadette Inglis, said the combined organisation will become a major player in the retail banking sector.

"A merger provides an opportunity for transformational change to future-proof both organisations - more so than can be achieved individually," Ms Inglis said.

Merger won't be completed until 2022

The merger is still subject to approval from members from both banks, as well as regulators, including the Australian Prudential Regulation Authority and the Federal Treasurer.

The MoU is the 'first step' in the merging process.

The target date for the completion of the merger is currently set at early 2022, subject to all conditions being met.

Image by kate.sade on Unsplash

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