KPMG’s Building Societies and Credit Unions Survey 2007 highlights strong profitability increases in the sector based on their close bond with their members.

Interestingly, KPMG note that the number of building societies declined slightly from 14 to 13 and
the number of credit unions decreased from 146 to 143 in 2007.
KPMG observes that "Consolidation in the sector was notable not so much for the number of
deals as there were few, but for the nature of the deals completed and
in progress."

The "nature of the deals" in the sector is not just credit union-credit union or building society-building society transfers but also credit union-building society and building society-regional bank transfers as evidenced by the Bank of Queensland’s "takeover" of Pioneer Permanent Building
Society in November 2006 and BOQ’s more recent proposed merger with Home
Building Society and offer for Mackay Permanent Building Society.

These cross-sector transfers have been aided by the transfer of non-bank financial institutions to Corporations Act regulation in 2000 and the Financial Sector (Business Transfer and Group Restructure) Act 1999.

Whilst the usual takeover and scheme of arrangement provisions of the Corporations Act apply, the regulation of financial institution mergers is overlaid with compliance requirements of the Banking Act and rules imposed by APRA, ASIC, ACCC and the ATO, as well as the ASX if a party is publicly listed.

And where a merger involves demutualisation of a building society or credit union, additional Corporations Act disclosure provisions apply so that the members can assess whether the merger is in their best interests.