Heartland expects decision on banking licence in November
By Paul McBeth
Aug. 10 (BusinessDesk) - Heartland New Zealand, the lender formed from the merger of Pyne Gould's Marac Finance with the Canterbury and Southern Cross building societies, expects to get the decision on whether it can have a banking licence in November.
The Reserve Bank is making its formal determination on whether to issue a banking licence after the Christchurch-based lender made a written application and provided certain independent reports, Heartland said in a statement. The timeframe for the determination process is uncertain, though the central bank has advised the process can take several months.
"The fact that engagement with the RBNZ continues and the formal determination process is underway does not indicate that HBS (Heartland Building Society) satisfies any of the criteria for registered bank status, or that the outcome of the process will be positive," the lender said. "Heartland expects that a decision will be available by a date in November of this year."
The goal of the merger was for the new entity to win a banking licence as lenders enter a new regime that imposes stricter controls on finance companies, though Heartland has been at pains to avoid commenting on its application.
The tougher rules came during the collapse of the finance sector through the latter half of the last decade, which destroyed several billion dollars of investor wealth.
Heartland stressed the timing of the process was uncertain and the outcome unknown.
The shares rose 1.5 percent to 55 cents in trading yesterday, and have gained 10 percent this year. The stock is rated an average 'outperform' based on two analysts' recommendations compiled by Reuters with a median target price of 60 cents.