Heartland New Zealand has been granted a banking licence.
The Reserve Bank says the former building society is now the 22nd bank in New Zealand.
It's been two years since Heartland was established through a merger of CBS Canterbury, Southern Cross Building Society and Marac Finance, and sought a licence.
Chief executive Jeff Greenslade said becoming a bank gives it added credibility with potential customers.
Mr Greenslade said Heartland will continue its strategy to build its presence in niche markets, such as livestock and invoice financing for farmers and businesses.
Heartland's shares have risen 3 shares to 70 cents each on Monday.