NZ's SBS Bank plans merger with building society

WELLINGTON, July 1 (Reuters) - SBS Bank, New Zealand's smallest retail bank, is planning a merger with a regional savings group to expand its customer and financial base, the two companies said on Thursday.

SBS, with assets of around NZ$2.6 billion ($1.8 billion), said it had agreed a merger with HBS, a building society in the Hawke's Bay region on the east coast of the North Island with assets of NZ$185 million.

'The merger will allow us to take a further step toward being a fully national, mutually-owned community bank,' SBS chief executive Ross Smith said in a statement.

The two groups are each owned by their respective depositor-members, and HBS members would join the SBS if the merger is approved.

SBS, which is based in the Southland region of the South Island, became a bank in October 2008 and is the smallest of New Zealand's 19 registered banks.

The SBS-HBS merger would take effect on Oct. 1 if approved.

The retail banking sector is dominated by four large Australia-owned banks, ANZ-National Group, Westpac , National Australia Bank, who owns the Bank of New Zealand and Commonwealth Bank of Australia who owns ASB.

There are two other small New Zealand-owned retail operations -- the state-owned Kiwibank, based on the NZ Post Office network, and the regionally based TSB Bank, which has a small retail network.

New Zealand investment and finance company Pyne Gould Corp last month said it plans a merger with two savings firms to form a retail bank. See

($1=NZ$1.44)

(Reporting by Gyles Beckford; Editing by Adrian Bathgate)

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