ME Bank today announced that it would join the Bank of Queensland (BOQ) in order to create a “genuine banking alternative powerhouse”.
The Bank of Queensland (BOQ) is to acquire Members Equity Bank (ME Bank), after securing a $1.3 billion equity funding package and ME Bank’s shareholders having unanimously agreed to accept an all-cash offer from BOQ.
BOQ temporarily halted trading on the ASX on Thursday afternoon (18 February) ahead of the announcement “for the purposes of considering, planning and executing a proposed equity capital raising… being conducted to fund a potential acquisition”.
The deal would see BOQ broaden its geographic risk, as its $44-billion book is Queensland-dominant, while ME Bank’s $27-billion book is Victoria-dominant.
Combined, the group will have pro forma total assets over $88 billion, with total deposits of more than $56 billion.
The ME brand, people, operations and Melbourne-based presence will be retained, “reflecting BOQ’s multibrand strategy and the commitment of both banks to retain their common customer-centric ethos and values”.
All three BOQ Group brands (BOQ, Virgin Money and ME Bank) would operate on the same platform. Both ME Bank and Virgin Money operate on Temenos.
The transaction is expected to be finalised by the end of this financial year (and, at latest, by August).
ME Bank said the deal would not affect or change existing customers’ accounts or arrangements, nor their relationship with ME Bank.
ME Bank’s shareholders, who represent 26 of Australia’s industry super funds, unanimously endorsed BOQ’s offer, which was recommended by the board.
The chairman of ME Bank, James Evans, said: “The board determined that the proposal from BOQ, which highly values what has been built by ME, was in the best interests of our shareholders, and the transaction was unanimously supported by them.
“Today’s decision represents a permanent shift for the better in the Australian banking landscape. This agreement brings together two culturally aligned organisations to form what will be an enhanced and influential banking alternative for customers.
“The increased scale and complementary offerings will benefit customers and employees alike. The combined group will be able to offer a wider network of service options, deeper resources, and the added reassurance that comes with a larger banking organisation.
“BOQ and ME are a natural fit. They are both home-grown banks with a range of simple and easy to understand banking products. They both offer a genuine alternative to the big banks. And importantly, they also share a common language, and that’s the language of customers,” Mr Evans added.
He said the deal would provide ME Bank the “benefits of greater scale” and enable it to compete "more effectively in the increasingly competitive banking market in Australia”.
It will give ME Bank access to additional capital, funding and expertise to support and invest in the delivery of improved products and services for ME Bank’s customers.
Mr Evans commented: “We are pleased that under the proposal, the ME Bank brand and operations will be maintained. We believe ME has a valuable and compelling brand, as well as a very strong operating model. ME customers will be able to enjoy the same simple and straightforward products and services we know they expect from ME Bank, along with the additional benefits of being part of a bigger bank.”
BOQ Group today welcomed the decision of ME Bank shareholders to accept the offer.
BOQ Group managing director and CEO George Frazis said: “We are truly excited to be able to welcome ME Bank customers and team members to the BOQ Group family. There is no doubt this is a tailor-made match because of our common objectives and customer-first cultures.
“Our multibrand strategy at BOQ means that the ME brand will be maintained, and their people will be able to continue doing what they do best – offering simple and straightforward banking products and terrific service to their customers. We are looking forward to the future with ME Bank on board.”
It is believed that the acquisition might see BOQ Group streamline its product offering.
Mr Evans concluded: “ME Bank was originally formed 27 years ago by a group of Australian super funds who saw the need for a bank to help everyday Australians get ahead. ME was the original challenger bank, and an online banking pioneer in Australia. ME’s track record of customer growth shows that it has indeed struck a chord with the people we originally set out to help.
“Our shareholders are proud of the organisation that ME Bank is today, and they are confident that the strong alignment in values and purpose between ME and BOQ will make BOQ a great home for the ME brand. We are confident that today’s decision will be of benefit to the customers and employees of both ME Bank and BOQ, and the Australian banking sector generally.”
More to come.
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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.