Banking shake-up: Heartland to buy TSB for $620m in proposed full-service merger
Tuesday, 2 June 2026
Heartland Group Holdings has signed a conditional agreement to acquire all TSB shares for $620 million.
The proposed combined business will be named TSB Heartland Bank Limited, creating a full-service capable challenger bank with a regional focus.
The $620m transaction represents 76% of TSB's book value and includes a 17.5% shareholding in Heartland for TSB's owner, Toi Foundation.
The deal is targeting completion in December 2026, subject to regulatory approvals, shareholder votes, and community consultation with Taranaki residents.
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.
The merger is targeting completion in December 2026.
However, finalising the deal depends on several conditions outlined in the agreement. These requirements include community consultation by Toi Foundation with Taranaki residents between June and July 2026, approval from Heartland shareholders at an August 2026 voting meeting, and necessary New Zealand and Australian regulatory approvals.
If the transaction is approved, one nominee from Toi Foundation is expected to be appointed to the Heartland board, while two existing TSB directors will join the board of the merged bank. It is intended that TSB Heartland Bank will retain Heartland Bank’s existing nationwide presence, while maintaining Taranaki as a key operational hub for customer-based banking services, local branches, and customer-facing roles.
Total transaction costs are estimated to be approximately $15 million, with $7 million reflected in Heartland's net profit after tax for the financial year ending June 30, 2026, and $8 million expensed in the financial year ending June 30, 2027. Total one-off integration costs of approximately $34 million are also expected to be incurred over a three-year period post-completion.
Heartland has a corporate history tracking back to Ashburton in 1875. The holding company currently operates Heartland Bank in New Zealand and Heartland Bank Australia. Toi Foundation, which has owned TSB since 1988, stated the transaction will provide it with a more diversified investment portfolio to enhance its ability to fund philanthropic activities across the Taranaki region.