by Grant McLachlan
Two hours of questions in New Plymouth, and the Toi Foundation’s trustees fronted up. But the answers raised sharper doubts than the deal began with — and the most forensic case against the sale came from the bank’s own former auditor.
For a meeting meant to reassure, it did the opposite. At one of its public sessions in New Plymouth, the trustees of the Toi Foundation sat in front of a packed and plainly hostile room to defend their plan to sell TSB to Heartland.
They were courteous and, I have no doubt, sincere.
They repeated that no decision has been made and that the consultation closes at the end of June. They also, over two hours, conceded rather more than they probably intended to.
I argued in my first column that this is a bad deal for Taranaki. The real test of the consultation was whether the trustees could answer the hardest objections to it.
On the evidence of the meeting, they could not — and the sharpest case against came not from a campaigner but from the chartered accountant who used to audit the bank.
So did the consultation strengthen the case for the sale, or quietly demolish it?
Contents
The auditor does the maths
The most damaging contribution came from Brian Busing, a chartered accountant who told the meeting he had been TSB’s auditor.
Busing kept it to numbers. By his reckoning, Heartland — after the $50 million dividend TSB pays out first — is handing over about $570 million for a bank with roughly $812 million of net assets: a discount of around $242 million. Toi gets 17.5% of that value back through its new shareholding, so, as he put it, the foundation is effectively giving away about $200 million — and that $200 million lands with Heartland’s existing shareholders.
He went further.
Over the two years to mid-2025, he said, Heartland’s retained equity actually shrank — it paid out roughly $26 million more in dividends than it earned — while TSB’s net assets grew by about $73 million because it reinvested most of its profit.
In other words, Toi proposes to swap an asset that builds value for one that pays out more than it makes.
For a critique the trustees could not dismiss as sentiment, this was it: their own former auditor, doing arithmetic in public.
The bank’s former auditor put the discount at about $242 million — and roughly $200 million of it flows to Heartland’s shareholders.
The deal nobody admits to starting
One exchange clarified how this began.
The chair, Chris Ussher, confirmed the process started with an unsolicited approach in late 2024, after which the foundation spoke with several parties before settling on Heartland as the most compelling.
Pressed at the meeting — and again by reporters — he would not say whether that first approach came from Heartland.
When an audience member asked the obvious question, why now and not five years ago or five years hence, the answer was essentially that there is never a good time and an opportunity arose.
This reframes the whole deal.
The trustees have presented the sale as a considered, long-term strategic move. But on their own account, the catalyst was an outside knock at the door that they will not fully explain.
The trustees cite confidentiality, which is understandable in a live negotiation — yet it leaves the community being asked to bless a sale whose very origin it is not allowed to see.
A profitable, community-owned bank is not being sold because a plan demanded it. It is being sold because someone asked, and the trustees decided to listen.
Diversification, by their own admission
The headline rationale is diversification.
Yet when a local who had read the accounts pointed out that swapping 100% of one bank for shares in another bank plus a loan to that same bank is not diversification, the chair agreed it achieves no immediate diversification — only, he argued, a pathway to it once the $264 million vendor loan is repaid, which Toi expects within two years. He projected the foundation’s annual income rising from about $10 million now to roughly $24 million, and noted the vendor loan suits the foundation because, being tax-exempt, it can hold the bonds efficiently.
That is a real answer, but it concedes the point critics have made from the start: on day one, this is not diversification at all.
It is a profitable local bank exchanged for a minority stake in a larger, riskier, listed one, plus an IOU.
The diversification is a promise about what Toi might do later, with money it does not yet have back.
The reassurances with an asterisk
On jobs, trustee Liana Poutu — who is also the foundation’s representative director on the TSB board — said there would be “no immediate changes”, arguing that because TSB is a retail bank and Heartland a specialist lender, there is little overlap to cut.
Poutu pointed to a commissioned social impact report and to genuine pressures on a small bank: an ageing core banking system, a banking app short on features, and three regulators to satisfy.
On control, the chair argued that a 17.5% holding makes Toi the largest shareholder and gives it real say over major decisions.
Each reassurance carried an asterisk.
“No immediate changes” is not “no changes” — an establishment board would write the implementation plan later.
And as one speaker, Jane Goss, asked pointedly: if 17.5% makes Toi the biggest shareholder, where is the other 82.5%?
The honest answer is that it sits with the market — and a 17.5% minority cannot stop a determined buyer, which is the very takeover risk the structure invites.
What we are not allowed to see
Again and again, the trustees said they could not share the evidence on which they are relying — the market-testing process, the valuation advice, the social impact report — because of confidentiality.
The community, meanwhile, asked for one specific thing it has not been given: an independent assessment of TSB’s future as a standalone bank, before any trustee vote.
None has been produced.
This is the heart of the transparency problem.
The trustees are asking Taranaki to trust a conclusion while keeping the workings confidential.
Some commercial sensitivity is legitimate — you cannot negotiate a deal in public.
But a community being asked to give up its bank is entitled to see, at the very least, an independent case for keeping it. That is exactly what is missing.
The room doesn’t count
The most revealing moment was procedural.
Told repeatedly that the room overwhelmingly opposed the deal, the trustees explained that a show of hands carries no formal weight; only written submissions through the portal will be considered.
They also said the trust deed fixes the consultation period and they cannot extend it, even though many in the room said they had had barely a week’s notice.
A local moved a set of resolutions — extend the consultation, publish a standalone-viability report, disclose what alternatives were considered, write to the regulators — to applause, though they were never formally seconded.
There is a hard logic to insisting on written submissions; oral feedback is hard to weigh. But combined with a short, fixed window and the admission that the room’s sentiment does not formally count, it leaves the community’s most visible objection — a hall full of opposed customers — with no official standing at all.
If you live in Taranaki and oppose this, put it in writing before the end of June. On the trustees’ own account, nothing else is counted.
The mayor steps in
The meeting also produced a political escalation.
New Plymouth mayor Max Brough told the room he had written to the Prime Minister, the Finance Minister, the Associate Finance Minister and the Deputy Prime Minister, demanding the deal be paused so the community could examine it properly.
A mayoral office formally asking central government to halt a private bank sale is not nothing. It signals this has moved well beyond a local grumble — and it lands alongside councillor Gordon Brown’s petition, which is climbing toward its 10,000-signature target.
The case the trustees made
In fairness, the trustees made a real case, and it deserves to be put at its strongest.
Heartland has earned about 9% return on equity over five years against TSB’s 4.7%, and that gap, they argue, is what drives the difference in value.
A bank ties up capital the foundation does not have — every $100 of lending needs roughly $15 of shareholder capital — so only a sliver of TSB’s profit ever reaches the community as grants.
Fisher Funds, which the foundation also owns 66% of, returns several times the cash TSB does.
The trustees stressed they have no personal financial stake in the outcome, that some TSB directors will lose their jobs if it proceeds, that the TSB name would be preserved, and that the bank’s chair, Mark Darrow, judges the merger to be in TSB’s best interests.
None of them, plainly, is doing this lightly.
The verdict: has my position changed?
No. If anything, the meeting hardened it.
Two of the strongest justifications for selling fell away in that room.
This is not a distressed bank: TSB made a $57.6 million pre-tax profit last year, with bad loans at just 0.5%, and it is retaining capital and growing.
And this is not a sale forced by strategy: it grew from an unsolicited approach the trustees will not explain.
Strip those two things away and what remains is a profitable, community-owned bank being sold below book value — by the auditor’s maths, some $200 million of value handed to another company’s shareholders — in exchange for a minority stake, an IOU, and a yield argument, with the key advice withheld and a hall full of opposed owners told their show of hands does not count.
I accept that the trustees are sincere and have no personal interest. I said so in my first column and the meeting confirmed it.
But sincerity is not the test.
The test is whether Taranaki is better off, and on what was shown in that room, it is not.
My position has not changed. It has deepened.
Taranaki went to that meeting for reassurance. It left with sharper reasons to say no — and until the end of June to say so in writing.
About the author and disclaimer
The author holds university qualifications in financial management, law, and marketing management. The author is not a practising lawyer, holds no current practising certificate, and nothing in this article is, or should be relied upon as, legal advice or the provision of legal services under the Lawyers and Conveyancers Act 2006. The author is not a licensed financial advice provider, and this article does not constitute regulated financial advice under the Financial Markets Conduct Act 2013. It is general commentary and analysis on a matter of public interest, drawn from information already in the public domain and cited above, and presented in an accessible form. It is not a recommendation or an opinion intended to influence any person’s decision to acquire, hold, or dispose of any financial product, and it does not take into account any individual’s financial situation, objectives, or needs. Statements attributed to speakers at the public meeting reflect what was said at that meeting and are reported as such. Anyone contemplating a financial or legal decision relating to the matters discussed should obtain independent advice from a licensed financial advice provider or from a lawyer holding a current practising certificate. To the extent permitted by law, the author and publisher accept no liability for any action taken in reliance on this article.
Originally published on klaut.media.
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