27 Aug 2010

Heartland bank hopes for Pyne Gould

9:08 am on 27 August 2010

Pyne Gould Corporation is hopeful the so-called heartland bank will be its ticket out of the extended retail deposit guarantee scheme, and the costs that go with it.

The South Island-based finance lender and fund manager made $22 million in the year to June, in part because of a strong performance by Marac.

That's a turnaround from last year's $54.4 million loss.

Marac is currently in talks with Canterbury Building Society and Southern Cross Building Society to form a $2.2 billion heartland bank.

The parties still believe a combined lender could be trading by early next year, and an application for a banking license could be filed by the middle of next year.

Pyne Gould chief executive Jeff Greenslade says talks between parties are progressing very well so far.

He says assuming an agreement is reached, investors in each of the organisations will be asked to vote on the proposed merger later this year.

Mr Greenslade says the new lender will operate under the Government's extended retail deposit guarantee scheme initially, but the aim is to be free from the scheme in time.