The major bank revealed that it had first commenced discussions with 86 400 in late 2020.
To support 86 400’s growth, it then subscribed for a minority stake in 86 400 and currently holds an approximate shareholding of 18.3 per cent in 86 400.
It now proposes to acquire the remainder of shares in 86 400 by way of a scheme of arrangement in a deal estimated to cost approximately $220 million.
The transaction, which is subject to approval by shareholders and regulators, would see all 120 people in the 86 400 team become part of the NAB group.
The 86 400 brand will be subsumed into the UBank brand under the deal.
Speaking to Mortgage Business, Philippa Watson, CEO UBank, said: "At this stage, our intention is to retain the UBank name, but brand is more than just a name, so we’ll be working closely with 86 400 to bring as much of the look and feel, customer experience and culture as possible to the combined business."
When asked whether UBank - which does not currently operate in the third-party channel - would look to distribute through brokers, she said: "We are very impressed by 86 400’s broker business and want to see this broker proposition continue to thrive if we receive the necessary regulatory and government approvals.
"We will work with the 86 400 team to develop the future model for home lending that brings together the best of our direct lending to customers supported by our great team and 86 400 lending through brokers."
The acquisition forms part of NAB’s plans to build its UBank brand and “deliver a market-leading digital experience and new product propositions to customers”.
The NAB group said the acquisition of 86 400 would accelerate UBank’s growth by “combining its established customer base, brand and colleagues with 86 400’s experience and technology platform”.
Ms Watson, added: “UBank has a proud 12-year history of innovation as a pioneering digital bank and today serves more than 600,000 customers to help achieve their financial goals.
“Combining with 86 400 will bring together UBank’s established business and 86 400’s experience and technology platform to meet the changing needs of our customers. We are looking forward to having the 86 400 team join us to deliver the next generation of simple, fast and mobile banking solutions.”
NAB chief operating officer, Les Matheson, also commented, stating: “Bringing together UBank and 86 400 is consistent with NAB’s long-term strategy and growth plans and will enable us to develop a leading digital bank that can attract and retain customers at scale and pace.
“The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers.”
Meanwhile, 86 400 CEO Robert Bell commented: “Over the past 18 months, we’ve challenged the status quo of banking through innovative products, services and technology.
“86 400 and its customers will benefit from NAB’s capital and balance sheet strength and investment spend to support accelerated growth and continued innovation, helping even more Australians take control of their money.”
86 400’s independent directors have unanimously recommended that its shareholders vote in favour of the scheme.
Completion of the transaction is subject to certain conditions, including regulatory approvals from the Treasurer, the Australian Prudential Regulation Authority and the Australian Competition and Consumer Commission, and approval of the scheme by the Federal Court.
Completion is expected to occur by mid-calendar year 2021.
86 400 and UBank will continue to operate as separate businesses until the transaction is finalised.
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.