If it goes ahead, the union would create one of Australia’s largest customer-owned banking organisations with more than 700,000 members, 90 branches and 1700 staff.

The two organisations announced they had entered into a non-binding agreement to explore a merger opportunity in August.

People’s Choice confirmed this week that negotiations were ongoing but remained tight-lipped “given the sensitivities around the issue”.

CEO Steve Laidlaw said in a statement that the boards of People’s Choice and Heritage Bank were finalising their due diligence.

“We expect that we will be in a position to provide a further update in March,” he said.

If the boards decide to proceed with the merger it will also have to be endorsed by members and approved by ASIC and the ACCC.

The companies have previously said there would be no branch closures or non-executive redundancies as a result of the proposed merger.

People’s Choice is Australia’s largest credit union with 390,000 members, almost 900 employees, $9.9 billion in total assets and 34 branches and advice centres in South Australia, Victoria, Northern Territory and Western Australia.

Heritage is one of Australia’s oldest and largest customer-owned banks with 320,000 members, 800 employees, $11.9 billion in total assets, and 60 branches and mini branches in Queensland and New South Wales.

Under the terms of the initial non-binding agreement, both organisations would have equal board representation and head offices would be retained in both Toowoomba and Adelaide if the merger goes ahead.

It is understood that the two brands would remain in the short term but would eventually adopt a new name.

SA-based Australian Central Credit Union and Savings & Loans merged in 2009 with members voting to name the new organisation People’s Choice Credit Union in 2011.