6 Oct 2010

Directorship of proposed bank board questioned

8:20 am on 6 October 2010

Concerns are being raised about the lack truly independent directors on the board of the proposed Heartland Bank.

Marac hopes to merge with the Canterbury and Southern Cross building societies early next year, and list the estimated $2.2 billion holding company, Building Society Holdings, on the stock exchange by February.

Pyne Gould's chairman, Bruce Irvine, will lead the nine-strong board of the new holding company, with all directorships being filled people who currently serve on the boards on the three lenders.

Under listing rules, once the merger is complete, Southern Cross and Canterbury building societies will cease to exist, therefore making those directors independent.

Business commentator, Rod Oram says while that makes them technically compliant with the rules, it's not best practice.

Des Hunt of the Shareholders' Association agrees, saying the lack of truly independent directors should sound alarm bells with potential investors in the bank.

Building Society Holdings will also consist of an operating company that will trade as a bank, though a banking license has yet to be approved.

Pyne Gould chief executive Jeff Greenslade says two independent directors will be appointed to the board of the trading bank, as required by Reserve Bank rules.