A proposed $620 million multi-million-dollar merger between two major retail banks is set to shake up the New Zealand financial market by creating a massive new challenger bank.
Heartland Group Holdings Limited signed a conditional merger implementation agreement with Toi Foundation and Toi Foundation Holdings Limited to merge Heartland Bank Limited and TSB Bank Limited. Under the deal, Heartland will acquire all TSB shares on issue.
The combined multi-million-dollar entity will be named TSB Heartland Bank Limited and is set to become New Zealand’s seventh largest bank, holding approximately $15 billion in total New Zealand assets.
The financial group stated that the transaction would combine the specialist product expertise of Heartland Bank with the cost-effective funding platform and transactional banking capabilities of TSB to form a full-service capable bank. Material cost synergies are estimated to deliver an ongoing annual benefit of approximately $34 million before tax, which is expected to be progressively realised over a three-year period post-completion.
The $620 million purchase price represents 76% of TSB’s book value as of December 31, 2025. The payment structure includes a pre-completion cash dividend from TSB of $50 million and $250 million of ordinary equity issued to Toi Foundation, giving it a 17.5% shareholding in the listed parent group. The remaining consideration comprises $56 million of subordinated debt issued by Heartland Bank and a $264 million vendor loan provided by Toi Foundation.
