Shareholders in the respective companies proposing a more than $2 billion New Zealand-owned "heartland" bank are being encouraged to vote for the project.
Broking houses Forsyth Barr and Craigs Investment Partners believe the size of the bank, which would be a merger of CBS Canterbury, Southern Cross Building Society, and Pyne Gould Corp's subsidiary Marac Finance, offered investors higher credit quality, lower costs of funding and positive regulatory oversight.
The trio announced plans for a heartland bank early in June and in mid-September confirmed their commitment, with an independent report saying the proposal was compelling and "fair to the shareholders of the merging identity".
Between them, the companies have almost 70,000 customers, 360 staff and 70 branches or agencies throughout the country and would have assets totalling about $2.3 billion - with plans to list on the stock exchange by February.
Forsyth Barr broker Peter Young said Marac bondholders and secured deposit holders, who will be the first group to vote on the merger plans on November 23, have to decide on moving their investments from secured bonds or deposits to unsecured deposits in the parent company Combined Building Society.
"The merger contains a number of unknowns and risks . . . but bondholders and depositors will benefit from an expected credit rating upgrade, lower costs of funds flowing through to profitability and the anticipated approval of a banking registration."
Mr Young recommended bond and deposit holders accept the merger proposal as did Craigs broker Chris Timms, who said the new entity would have a "significantly enlarged" balance sheet and would come under the Government's's extended retail deposit guarantee scheme, which expires in December next year.
An application had been made to the Crown to join the guarantee scheme, with the merger proposal conditional on acceptance.
Marac's parent, Pyne Gould Corp, would take a 71% share in the bank, with CBS Canterbury and Southern Cross Building Society taking 14.5% apiece.
• CBS Canterbury reported an interim loss after taking into account the cost of planning the merger with rivals, but made a modest underlying profit.
The 135-year-old building society reported a $1.69 million after-tax loss for the six months to September 30, compared with a $1.04 million profit in the same period last year. The accounts show restructuring costs of $1.53 million.
At balance date, CBS Canterbury had equity of $49.88 million, down from $51.55 million at March 31. It had total assets of $537.48 million and total liabilities of $487.6 million.
