{"id":457737,"date":"2026-06-02T21:40:10","date_gmt":"2026-06-02T21:40:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/457737\/"},"modified":"2026-06-02T21:40:10","modified_gmt":"2026-06-02T21:40:10","slug":"fitch-moves-heartlands-credit-rating-outlook-to-positive-after-tsb-merger-proposal-what-does-the-deal-mean-for-customers","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/457737\/","title":{"rendered":"Fitch moves Heartland\u2019s credit rating outlook to positive after TSB merger proposal. What does the deal mean for customers?"},"content":{"rendered":"
\u201cHeartland has been a bank that has grown up playing in niches and staying away from products that the big banks offer,\u201d Dixson explained. <\/p>\n
\u201cTSB has been very much a customer-focused, community-focused bank, offering home loans in the main.<\/p>\n
\u201cHeartland started offering home loans some years ago but was unable to get to a position of scale in that portfolio.\u201d<\/p>\n
Hence, acquiring TSB\u2019s $6.5 billion mortgage book was appealing. <\/p>\n
Credit rating agency Fitch believed the merger would improve Heartland\u2019s risk profile and strengthen its asset quality. <\/p>\n
Shortly after the proposal was announced, Fitch changed the outlook on Heartland\u2019s BBB credit rating from stable to positive.<\/p>\n
It said TSB\u2019s large mortgage book offset some of the risk associated with Heartland\u2019s niche loan portfolio.<\/p>\n
Heartland is listed on the NZX and ASX. Its share price jumped from $1.14 to $1.27 on the news of the proposed merger.<\/p>\n
TSB is the seventh-largest bank in New Zealand by assets, while Heartland is the ninth-largest. Should the merger proceed by December as planned, the new entity would be the seventh-largest bank in New Zealand. <\/p>\n
Fitch said the acquisition would result in Heartland\u2019s share of the New Zealand banking system assets more than doubling but at 2%, this share would remain small. <\/p>\n
Dixson said TSB also had a lot of capability in terms of transactional banking, term deposits and savings accounts, which would enhance Heartland\u2019s offering. <\/p>\n
He noted compliance costs and investment in technology disproportionately affected smaller banks. <\/p>\n
\u201cThat\u2019s where we find both Heartland and TSB \u2013 joining them together \u2013 provides us a greater opportunity to leverage that cost base, to leverage that technology investment, and to ultimately be able to offer a more competitive offering,\u201d he said. <\/p>\n
In an email to its customers, Heartland assured that if the merger proceeded, both banks would keep operating as they do today and customers\u2019 banking services wouldn\u2019t change.<\/p>\n
Dixson cautioned that the new entity\u2019s board may wish to remove any duplication across products. But the idea wasn\u2019t to shrink the offering. <\/p>\n
He also said, \u201cIt is intended that TSB Heartland Bank will retain Heartland Bank\u2019s existing nationwide presence, with Taranaki as a key operational hub for customer-based banking services \u2013 including maintaining a local branch network and customer-facing roles in Taranaki.\u201d<\/p>\n
Regional considerations<\/p>\n
Heartland does a lot of business in Canterbury \u2013 12% of its lending is done in this region, while 26% of its funding comes from Canterbury. <\/p>\n
As for TSB, it is concentrated in Taranaki, which accounts for 31% of its lending and 49% of its funding.<\/p>\n
Toi Foundation \u2013 a Taranaki-centred philanthropic community trust \u2013 will consult with the community before going ahead with the transaction. <\/p>\n
Dixson said it was also important for Heartland to hear the views of the public, given how embedded TSB was in the community. <\/p>\n
\u201cWe would not want to proceed with a transaction where there was negative reaction or sentiment,\u201d he said. <\/p>\n
Under the proposed deal, Toi Foundation will then reinvest proceeds from the sale of TSB into the new bank, so it had a 17.5% shareholding in Heartland Group.<\/p>\n
A Toi Foundation nominee will also be appointed to the Heartland Group board, and two existing TSB directors will join the TSB Heartland Bank board.<\/p>\n
Toi Foundation chairman Chris Ussher said this structure would enable Toi Foundation to support the merged bank\u2019s strategic direction, while also freeing up capital for the foundation to diversify its portfolio. <\/p>\n
It has a 66% shareholding in Fisher Funds, which Ussher said he was still happy with.<\/p>\n
\u201cWe recognise the importance of TSB to its customers, staff and the wider region, and we are committed to listening carefully to feedback before any final decision is made,\u201d the foundation said.<\/p>\n
Jen\u00e9e Tibshraeny is the Herald\u2019s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.<\/p>\n