SBS Bank, New Zealand's largest building society, has agreed to buy 50 percent of Staples Rodway Asset Management (SRAM) as part of a strategy to build scale in wealth management and lift its presence in the North Island.
Financial details of the transaction are confidential, said Wayne Evans, chief executive of SBS Group, which owns SBS Bank. The deal will add to SBS's growth and profits in the first year of ownership, he said. The bank reported net profit of $15.6 million in the 2014 financial year.
"Both sides believe it is fair value," Evans said. "The market itself is going through a fair amount of change as a result of regulatory change. Scale becomes important, as does technical capabilities."
SRAM's existing shareholders are accountancy and business advisory firms that make up the Staples Rodway chartered accounts group, a firm heavily weighted to the North Island that dates back some 70 years. Evans said SBS, once known as Southland Building Society, doesn't currently have high brand visibility in the North Island, with five outlets compared to 12 in the South Island. Three of the five in the North are HBS Bank branches in Hawke's Bay.
Evans said the company has increased its marketing spending as part of a strategy to build a national brand. Partly to support the profile raising, it announced a five-year fixed rate home loan of 4.99 percent, about 100 basis points below the average five-year mortgage rate on offer, according to interest.co.nz data.