Illawarra Credit Union to merge with fellow member-owned bank

The pair of member-owned banks signed a memorandum of understanding in late 2023 and after a due diligence period the merger will now go to the Australian Prudential Regulation Authority for approval.

The merger will also go to a vote of both bank's members at their respective annual general meetings later this year.

In a statement, the banks set out that there would be no forced staff redundancies as a result of the merger.

Deborrah Lambourne, chair of Illawarra Credit Union, said the merger would benefit customers by improving technology capability and physical distribution.

"The merger will also enhance our resourcing capabilities, allowing us to meet our ongoing prudential and regulatory obligations while increasing our focus on innovation, enhanced member experiences and growth."

The combined bank would have almost 80,000 members and customers and combined assets of approximately $2.5 billion.

Community First Bank chair Stephen Nugent said the merger would improve services for customers.

"The merger will create valuable synergies, member and staff benefits and allow the two organisations to position themselves for their next phase of growth."

Illawarra Credit Union was established in 1972 and has previously merged with a number of other financial institutions. A proposal for the credit union to merge with IMB Bank fell apart in 2009, partly due to challenges integrating the two banks IT systems.

The number of smaller financial institutions in Australia has nearly halved in a decade, as credit unions and mutual societies attempt to achieve economies of scale, particularly as the cost of meeting regulatory standards rises and interest rates have been at historic lows.

The future merged board will include representatives from both financial institutions. The names of both entities will remain the same for 12 months after the merger, with a decision made in the future whether to retain the Illawarra Credit Union naming and brand.

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