Momentum is gathering for the proposed $2.2 billion "heartland" bank, whose parent company has gained an investment grade rating, Crown guarantee, and has begun trading the debt securities of one of the three merger partners.
Parent company, the Combined Building Society, is now focusing on bank registration after having gained an investment grade credit rating from international agency Standard & Poor's on Wednesday - of BBB-.
The Combined Building Society is a subsidiary of Building Society Holdings Ltd, and its chief executive Jeff Greenslade said the S&P rating was a "significant endorsement" and would allow it to go ahead with planned strategies "a key one being the application for bank registration".
Craigs Investment Partners broker Chris Timms said the BBB- rating showed the company was in "good health", noting S&P would have been "conservative and careful" in its assessment, considering ratings agencies had come under intense scrutiny themselves during the financial crisis.
He said because the merger proposal had clearly outlined its strategy and stuck to deadlines it should not face any hurdles when applying to the Reserve Bank for its banking registration.
"It appears to have met all the Reserve Bank criteria so far," Mr Timms said.
An allotment of BSHL shares is scheduled to take place today, with BSHL expecting to list on the stock exchange by the end of the month.
Plans were announced in June last year for a merger between Canterbury Building Society, Southern Cross Building Society and Marac Finance, which as the Combined Building Society, would have assets of about $2.2 billion and about 70,000 customers.
Marac is a subsidiary of Pyne Gould Corporation, which is taking a 71% stake in the company, with CBS Canterbury and Southern Cross Building Society each taking a 14.5% stake.
Approvals from shareholders and independent reports have been forthcoming since June, and earlier this week participation by the Combined Building Society in the Crown's extended retail deposit guarantee scheme, which runs until the end of the year, was approved.
Standard & Poor's said in a statement it had assigned a rating of BBB-/A-3 to Combined Building Society, saying the financial risk profile of the company has significant support from its sound funding and liquidity position, capital adequacy, and improved financial flexibility.
S&P analyst Peter Sikora said ". . . the ratings reflect our favourable view of Combined's business risk profile, which is supported by its small but good market position in the New Zealand non-bank deposit-taker sector, and its good business and geographic diversity".
Bonds formerly issued by Marac, but now issued by the Combined Building Society, began trading on the debt securities division of the New Zealand stock exchange yesterday.
