Australia’s P&N, Beyond Bank likely to seek other merger opportunities

S&P foresees further consolidation in Australia’s mutual banking sector.

Beyond Bank Australia and Police & Nurses (P&N) will likely pursue other consolidation opportunities following the cancellation of their proposed merger, said S&P Global Ratings.

Whilst the two Australian mutual lenders will forgo the potential benefits of greater scale and efficiencies a merger would bring, the stand-alone credit fundamentals of each entity remain broadly in line with most Australian mutual bank peers, the ratings agency said in a report.

P&N and BBA predominantly operate in the residential lending market.

Despite this cancellation, S&P still foresees the possibility of further consolidation not just involving the two banks but also other entities in Australia’s mutual banking sector.

In a statement, P&N announced that it concluded its due diligence on the possible merger and determined that the merger “would not be in the best interests of its members.”

Had the merger proceeded, the combined entity would have been worth about $23.8b, S&P estimates.