Unity Bank announced the proposal on Tuesday, saying the merger between the two organisations will deliver further benefits to members, while harnessing shared values and an absolute commitment to providing fair, ethical and competitively priced banking services.

Chief Executive Officer with Reliance Bank, Mark Genovese news of the merger was exciting, and would bring with it the capacity of the bank to do more for both its members and the community.

He said a memorandum of understanding was signed this week following several months of confidential discussions. The MOU sets out an agreed timetable under which the two organisations plan to merge next year.

Mr Genovese said subject to the required regulatory and member approvals, he anticipates completing the merger by September next year. All staff will be offered a role in the merged organisation and will have the benefit of improved career and development opportunities.

Mr Genovese said the merger will create one of Australia's largest nationally-operating mutual banks with projected assets as the merger date of around $2.5 billion, plus a network of 35 branches and a full suite of digital payment services. The increased scale and cost synergies from the merger will allow the merged organisation to fund further innovative products and community support services.

Further details of the merger will be communicated to members over the coming months.