The Reserve Bank has approved Heartland New Zealand's application to be a licensed bank, ending a long wait for the lender.
The central bank says Heartland has become New Zealand's 22nd registered bank.
Securing a banking licence has been a key plank of Heartland's strategy in a shift away from a new regulatory regime that imposed stricter conditions on non-bank financial institutions.
"Heartland, as a bank, needs to retain the advantages of being small: local and accessible, at all times seeking to be innovative," Heartland chief executive Jeff Greenslade says in a statement.
Shares in Heartland rose 3c following this morning's announcement and are trading at 70c on the NZX.
Last month Heartland had its investment grade BBB- credit rating affirmed with a stable outlook by Standard & Poor's, which cited the lender's strength as very strong capital and earnings assessment, good geographic and business diversity, and sticking to its timeline for its post-merger plan.
Heartland had been hoping to update shareholders on its strategy as a fully-fledged bank at the annual meeting on November 30, and give them "greater comfort that the outcome on bank registration can be meaningfully addressed at the meeting."
Its expectation of a November decision was based on the customary pace for New Zealand incorporated applicants.