ANZ National Bank has confirmed it will drop the National Bank, with the brand to be gradually phased out over the next two years.

Staff were told of the change at co-ordinated meetings this afternoon.

About 20 branches will be closed, reducing the network to about 280. The remaining National Bank branches will be rebranded at a cost of $100 million.

ANZ customers will be moved across to the National Bank computer system while customers would continue to be served by the same staff, with no job losses on the front line.

ANZ would take over all sponsorship and community commitment.

ANZ National Bank chief executive David Hisco said ANZ bought the National Bank in 2003 and after nearly 10 years of reducing duplication between the two brands "the next logical step is to combine them into one".

"In recent years we've made things simpler for customers by creating one management structure across both banks, one customer approvals process and, very soon, we'll be moving to one set of products," Hisco said.

ANZ has the rights to the black horse and green colour branding of the National Bank from British Bank Lloyds TSB until 2014.

"So it makes sense to change to ANZ, the brand used in 32 markets around the world," Hisco said.

"For most National Bank customers, it will be business as usual - they will see the same people, just wearing a different uniform."

About 20 branches in close proximity to each other would be merged over the next two years, still leaving the ANZ with the biggest branch network of any bank.

ANZ and National Bank branches located close to each other will in most cases either merge into the larger branch or relocate to a new area nearby, Hisco said.

Costs had been reduced in recent years by streamlining head office management and processes.

More savings would come from eliminating duplicated information technology costs under the new computer system.

A group of mainly technology contractors would be out of a job as the complex computer project wound up over the next few months, Hisco said.

Bank workers' union First Union called on ANZ to make good on its assurances that jobs and services won't be cut as a result of the merger decision.

Union secretary Andrew Casidy said the ANZ and National banks were "doing very well off their Kiwi customers, and they need to know that both customers and staff will be watching these changes very closely.

"Customers have been kept in the dark for too long about these plans as have the bank's own staff."

ANZ National claims nearly half the population is a customer, and has a combined workforce of about 9000.



ANZ bought the National Bank from Lloyds TSB bank for $6.9 billion in the biggest deal in New Zealand's corporate history at the time.



Speculation about when the Australian-owned ANZ would kill off National's prancing horse has been a feature of the industry ever since.



Abandoning the National Bank brand could result in Australian parent ANZ writing off up to $3.5b in goodwill and reducing its capital requirement, banking expert David Tripe said.



Dropping the brand within the current financial year might allow ANZ to write off up to $3.5b in goodwill associated with the brand, if it could convince accountants it was allowed to do so under new accounting rules, Tripe said.



That would substantially improve the reported return on equity for the New Zealand business, he said.



But it would be a "brave and costly" move to make the National Bank brand suddenly disappear, he said.



Branch management had already been brought under a single structure and customers of both banks have been able to make deposits in either bank since January last year.