Toi Foundation trustees have voted to sell TSB Bank to Heartland Group for $620 million, pushing ahead with the deal despite a last-minute push from Kiwibank.
Under the agreement, Heartland will acquire all TSB shares to form a new merged entity called TSB Heartland Bank, leaving the foundation with a 17.5% stake in the parent company.
Toi Foundation chair Chris Ussher announced the decision on Thursday morning.
He said trustees considered every community submission and independent advice before making the call. "After considering all the information available to us, trustees believe proceeding is the best long-term decision for Toi Foundation, the Taranaki community and TSB," Ussher said.
A central argument for the sale is the ability to diversify the foundation's investment portfolio.
Ussher said the deal would increase sustainable, long-term cash returns. The trust currently distributes about $30 million annually in grants across Taranaki, which it expects to increase to approximately $50 million a year if the sale proceeds.
The decision follows a turbulent few weeks, including a last-minute proposal from Kiwibank parent Kiwi Group Capital.
While Toi Foundation did not name Kiwibank directly in its statement, Ussher addressed the market speculation.
He confirmed the foundation proactively engaged with a range of parties early in the process, and that Heartland offered the strongest proposal in terms of value and addressing community concerns like job and branch retention.
Opposition to the sale recently peaked when the Taranaki Community Accountability Society took legal action to attempt to block the vote. The High Court declined their application for an interim injunction earlier this week.
Public feedback also played a major role in the lead-up, drawing 1,267 submissions from Taranaki residents across two consultation periods.
"Some submissions provided detailed perspectives that helped trustees test the proposal and consider whether any matters had not previously been considered or given appropriate weight," Ussher said.
Both banks have moved to reassure locals. TSB contacted customers to confirm it is business as usual, with plans to keep branches open and retain the New Plymouth contact centre.
Heartland chief executive Andrew Dixson welcomed the approval on Thursday. He said the move respects the importance of TSB's local connection and preserves it through the merger.
"Taranaki will remain a key operational hub for customer-based banking services, including maintaining a local branch network and customer-facing roles," Dixson said.
He said the new entity would become a stronger New Zealand challenger bank with the potential to deliver greater value for customers, shareholders and communities across the country.
The deal remains conditional on regulatory and shareholder approvals. Heartland plans to submit its Reserve Bank application on Monday, August 31. Shareholders will vote on the transaction at a special meeting on September 30, with completion targeted for December.
With Toi Foundation’s community consultation condition now satisfied, the deal remains conditional on Heartland Bank shareholder approval and regulatory approval.
Heartland plans to submit its Reserve Bank application on Monday 31 August. Shareholders will then vote on the transaction at a special meeting on September 30, with a target completion date set for December.
