A new Christchurch-based listed bank is one step closer to formation after signing a binding merger agreement last week.

Marac Finance, Pyne Gould Corporation, CBS Canterbury and Southern Cross Building Society are joining forces to form a new ‘heartland’ bank, with the three boards finally agreeing terms.

Stuart Locke, Professor of Finance at Waikato University, says the bank would have plenty of support from farmers.

“The idea’s good, the timing’s excellent, with South Canterbury [Finance] disappearing, and now the earthquake, and this foul weather.

"It’s a great fillip and boost for the rural sector now, that someone cares, and want to get down there and support them."

Stuart Locke says resourcing will be the group’s main focus, as only Marac has access to significant funds.

"That’s why I think emotionally it pulls all the right strings, the timing’s brilliant, and the only thing left to see is whether they’ll have the substance to make it work or not.

"As resources get released from South Canterbury [Finance] get released it would be great for them to be able to pick them up.

"If the Allan Hubbard supporter mentality is widespread among farmers of the south, you can certainly see them getting in behind an operation like this."