The proposed merger of three finance lenders has received a boost in its quest to become a bank, with Standard & Poor's saying it has a chance of achieving an investment grade credit rating in the next three months.
The planned merger involves Marac, Canterbury Building Society and the Southern Cross Building Society.
Standard & Poor's analyst Derryl D'Silva says the proposed entity would benefit from being larger and more diversified, with a bigger capital base.
Mr D'Silva says the key to raising the BB+ rating one notch to BBB-, which is the minimum needed to apply for a banking licence, is implementing its plans successfully.
He says it's still a complex merger structure which needs to be managed appropriately until January.
Mr D'Silva says the merged structure will need to meet proper board and governance expectations, to gain the confidence of debenture holders and depositors and any other providers of wholesale funding such as banks.
He says the earnings potential of this merged group will need to be measurable, and any financial impact from the Christchurch earthquake also needs to be properly managed.