New Zealand's largest credit union NZCU Baywide plans to unite with credit unions across New Zealand in a move that will pool a whopping $600 million in assets.

A total of five New Zealand credit unions have signed a conditional Heads of Agreement to merge, after their boards recommended a transfer of engagements into one single credit union.

NZCU Baywide chief executive Gavin Earle said the merger of NZCU South, NZCU Central, NZCU Steelsands, Aotearoa Credit Union and Hawke's Bay-based NZCU Baywide, all under one brand provided "significant opportunities" for all parties.

"We have about 28,000 members in Hawke's Bay in our credit union and the benefits of us coming together is significant in terms of scale and efficiency."

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Detail of what the merger would mean for staff was still being worked through.

"It's a real opportunity to compete in this space going forward because there is a real opportunity for a Tier 2 - we're not one of the big banks, we are a co-operative with members and it's all about focusing on those members.

"It's going to be a compelling proposition for our members going forward."

It would also boost investment in technology and make the co-op more competitive.

"This is a real success story for Hawke's Bay. We have a really strong presence in the Bay and for us this is another step in cementing the future of our credit union to the benefit of everyone."

The proposal would be put to members in the New Year for ratification.

The merged entity would have more than $600m in assets, serve around 75,000 New Zealand member owners and almost 300 staff.

Upon completion of the transfer of engagements, the merged credit union will be positioned as a strong competitive alternative to mainstream banking in New Zealand.

Iain Taylor, NZCU Baywide chairman and spokesman of the merged entity, said the move was focused on creating a credit union for the future.

"We have a collective vision to continue to develop a strong, competitive and sustainable sector that delivers on its purpose of 'people helping people' across New Zealand.

"The scale of the larger credit union will deliver efficiencies, better pricing for savings and lending rates, and reach across the combined nationwide branch network and online. It will bring more potential to invest in technology to improve services and wider access to capital for the benefit of member owners.

"Scale does matter in an increasingly competitive financial sector and we all believe our united approach will bring a competitive banking alternative that is 100 per cent customer and Kiwi owned.

"This is about securing a sustainable future for all our membership bases. The benefits are significant for our member owners to enjoy better products, pricing and a sustainable financial service provider in the future."

The merged credit union will combine services and specialise in NZ home loans, personal loans, savings and investments, everyday transaction accounts and insurance for vehicles, loan protection, funeral protection, home and contents.