SBS, formerly known as the Southland Building Society, received its licence yesterday from the Reserve Bank.
"Our decision had little to do with the current world financial crises but was more due to the proposed changes to the non-bank regulatory regime and the issues around a number of financial company failures," SBS chief executive Ross Smith said in an interview.
Many people did not fully understand how a building society operated and having a banking licence added to the credibility of SBS.
There was a segment of New Zealanders who wanted the certainty of being a customer of a New Zealand-owned bank.
SBS hoped to tap into that sentiment.
Customers would not notice any immediate changes.
Initially, SBS would make sure it complied with all Reserve Bank requirements and both parties were confident there would be no problems, he said.
"Once we get that bedded down, there are opportunities to grow our business. That could be opportunities through organic growth or merger and acquisitions."
There were no merger proposals on the table but SBS had been in informal talks with people in the savings sector, Mr Smith said.
He had told them SBS was pursuing a bank licence.
They had told him that when the licence was gained, to go back and talk to them again about how they would fit into the SBS model.
"Within 12 months, you could see some consolidation in the industry."
That could mean an increase in total assets.
SBS had branches in Tauranga, Hamilton, Blenheim, Nelson, four in Christchurch, Dunedin, Invercargill, Queenstown and Cromwell.
Mr Smith agreed there were plenty of places into which SBS could expand.
SBS had ambitions to be a national player.
The board had been considering registration and talking to the Reserve Bank for about five years.
In October last year, the board decided it would pursue a banking licence but was in no hurry, Mr Smith said.
It was expected to take much longer than it had but there was a sense of relief and excitement that the decision had been made and the licence issued.
"We weren't racing for it because it wasn't critical to our survival. We went at a pace we thought appropriate."
Since securing the investment-grade credit rating last year, and making minor changes to the SBS rules to meet governance requirements of the Companies Act, SBS had been ready to become a bank.
But that was not enough.
The protection of the members' rights and privileges had been of paramount importance in briefing and consulting with advisers and the Reserve Bank.
The board had remained firmly of the view that customer ownership of SBS was essential to its mutual character and at the heart of its 139 years of success.
SBS would remain the prudent and conservative banking services provider that it had been for the past 139 years and maintain its strong community values.
However, there was no assurance that SBS would offer all banking services.
It would take its current business model into the banking system and look for business opportunities that best fitted, Mr Smith said.
SBS would look for points of difference and one of those was being New Zealand owned.
"Becoming a member-owned bank ensures our relationship with our members remains unchanged and we are not distracted by the need to satisfy shareholder returns. We will be a bank with the heart of a building society."
