SBS Bank may combine with HBS Building Society, if an offer by the board of the Hawke's Bay-based mutual is accepted.

Chief Executive of SBS Bank, Ross Smith said, "We are particularly excited about a merger with a fellow mutual building society of over 100 years standing with identical principles and values".

He said that members of their bank are assured that this fusion will further strengthen the position of SBS Bank in the market. Being the only customer owned bank of New Zealand, the top most interest of their members have always remained their first priority.

In terms of daily procedures, nothing will be changed for existing members of SBS Bank except the facility to carry out their banking more at North Island branches around the nation.

At the same time, the merger will also allow the bank to take a further step forward for becoming fully national and mutually owned community bank.

Mr. Smith suggested that a Heads of Agreement had been signed with HBS. It will provide retention to all staff and management at HBS and the 125 year old, HBS trademark.

There is also an assurance for sustained and augmented community distributions through sponsorships and an early interest rate premium for term depositors.