Superbank is closing down its banking operations in this country, and its $500 million mortgage portfolio has been sold to GE Money.

The bank is a joint venture between Australia's fifth-largest retail bank, St George Bank, and supermarket cooperative Foodstuffs.

In December St George managing director Gail Kelly said Superbank was under review for sale because of tightening economic conditions and competition that had squeezed margins.

A statement today from St George and Foodstuffs said that since Superbank's launch in February 2003, market conditions had changed and margins in mainstream residential lending in New Zealand had become extremely competitive.

Customers' loans would be transferred to GE Money and would essentially continue as normal. Superbank would continue to manage loans and associated transactional accounts through the transitional period.

Superbank had also entered an agreement with Kiwibank to provide Superbank's deposit customers with a convenient transfer of their SuperSaver account to Kiwibank's e-savings product, Online Call.

Deposit customers who did not wish to take up this offer will continue to earn interest on their Superbank SuperSaver account until September 25, at which time the deposit and accrued interest will then be repaid to them in full.

In the short-term, all accounts will continue operating as normal and customers will be notified of any changes.

GE Money said the deal took its total assets in this country to $4.4 billion, its mortgage assets to $2.8 billion, and increased its customer base by 2200.

The company is part of the US-based GE Consumer Finance group, which operates in 51 countries and is a business unit of General Electric Company.

GE Money described itself as the largest non-bank finance company in this country, having started with $100 million of assets from the purchase of AVCO Financial Services in 1999, followed by a further $800 million in 2002 through the purchase of AGC.

In 2004 it bought Australian Financial Investments Group, which included Wizard Home Loans, adding $1.5 billion to total assets.

In March this year it bought Pacific Retail Finance and that, combined with the Superbank mortgage assets, added a further $1 billion in assets.

GE Money New Zealand managing director Jim Cock said a significant percentage of the Superbank mortgage portfolio was generated through a network of New Zealand mortgage brokers.

"GE Money is 100 per cent committed to the broker channel in New Zealand and this acquisition gives us a strong platform to significantly strengthen our relationships with this essential business channel."