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How the shape of the mortgage industry changed in 2021

The year 2021 has been another turbulent one, with a massive amount of structural change taking place in the mortgages space this year. We review how the shape of the home loan lending industry changed in 2021.

BOQ acquires ME Bank for more than $1bn

Bank of Queensland (BOQ) entered into an agreement to acquire 100 per cent of Members Equity Bank Limited (ME Bank) for $1.325 billion. The acquisition – which completed in July 2021 – was funded by an underwritten capital raising of $1.35 billion. The non-major bank is now the third brand under BOQ Group, standing alongside BOQ and Virgin Money.

86 400 acquired by NAB

The digital lender was acquired by National Australia Bank (NAB) in May 2021 and all of 86 400’s banking assets and liabilities were transferred to NAB as the fintech prepares for its merger with the major bank’s own digital subsidiary, UBank.

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As such, it will no longer operate under its own ADI licence, instead working under NAB’s licence.

The 86 400 brand is expected to be subsumed into the UBank brand in due course, with Philippa Watson, chief executive of UBank, leading the helm after being appointed CEO across both businesses.

NAB confirms Citi acquisition plans

NAB confirmed that it had entered into an agreement with Citigroup to purchase its Australian consumer business – including its mortgage and unsecured lending books – for approximately $1.2 billion. The ACCC has not voiced any competition concerns and the deal is expected to complete “in the first half of calendar year 2022”.

ScotPac breaks into mortgages

The non-bank lender launched into residential mortgage lending as it expanded its product suite and offering to SMEs.

It now offers three new products for business owners:

  • A residential home loan
  • A property-secured business loan
  • A property-secured line of credit

All three products provide access to $20,000 to $2 million per property, or up to $4 million for multiple properties. They can reportedly reach conditional approval in 48 hours.

New banks formed after RADI granted

APRA approved Avenue Bank Limited and Alex Bank to operate as restricted authorised deposit-taking institutions (RADI) .

Avenue Bank is a business bank focusing on cash-flow finance, with 48-hour pre-approval, while Alex Bank is a digital personal lender. The latter took its first major steps into the broker channel after joining the lender panel of asset finance aggregator Platform Finance.

Pepper Money lists on the ASX

The non-bank lender listed on the ASX on 25 May under the ticker code PPM. It launched its IPO at an offer price of $2.89 per share to raise $500.1 million. The lender chief executive Mario Rehayem said that the listing would help the lender further expand its product offering.

Prospa announces first brokerage acquisition

The SME lender announced it was acquiring Queensland-based commercial brokerage Loanezi, headed up by broker and CAFBA director Renee Tocco. Ms Tocco joined Prospa as northern regional manager. The deal completed in October 2021 and saw almost 1,000 small-business Loanezi customers become managed by Prospa.

TMB merges with Pulse Credit Union Limited

In November, Teachers Mutual Bank Limited (TMBL) completed the legal transfer to formalise its merger with Pulse Credit Union Limited (PCUL).

The 6,000 PCUL members who voted in favour of the proposed merger (98 per cent) are now part of either Health Professionals Bank or UniBank (both are divisions of TMBL). 

Latitude acquires Symple Loans

The non-bank acquired Melbourne-based personal lender Symple Loans in October after paying $100 million in cash and issuing 38.46 million of its shares at $2.60 (totalling $99.9 million).

According to a statement by the ASX-listed company, Latitude will now immediately begin integrating Symple, establishing the personal lending fintech as the lending platform for all of its personal and auto loans. 

Firefighters Mutual Bank and Firefighters Credit Co-operative join forces

In May, the 3,000 members of the former Firefighters Credit Co-operative members joined Firefighters Mutual Bank (a division of TMBL) following a merger

The merger expands the bank’s presence in the Victorian emergency services sector.

Volt acquires Australian Mortgage

In July, Volt Bank acquired fintech mortgage manager Australian Mortgage – formerly known as Australian Mortgage Marketplace – as it looks to roll out its digital mortgage offering.

The deal, which settled for undisclosed sum, has resulted in Australian Mortgage’s “Intelligent Credit” solution powering the lending component of Volt Bank’s banking-as-a-service platform to help deliver the challenger bank with “a multi-channel revenue capability, purpose-built to rapidly scale lending volume”.

Newcastle Permanent considers merging with Greater Bank

Newcastle Permanent flagged that it was considering a merger with rival mutual group Greater Bank in August, with the two now deep in a due diligence process.

The combined entity would collectively have $19.8 billion in total assets and a combined customer base of approximately 600,000 customers.

It is intended that the two brands would be “preserved”, with both Newcastle Permanent and Greater Bank continuing as “individual brand identities.

The next step is applications to APRA, ASIC and the ACCC, before the banks seek member approval. Subject to these steps, the target date for the completion of the merger is early 2022.

Heritage Bank in merger discussions with People’s Choice

Toowoomba-based Heritage Bank and Adelaide-based People’s Choice have entered into a non-binding agreement to explore a merger opportunity.

If a merger were to proceed, the combined entity – which would retain a mutual status – would have approximately 700,000 members and $22 billion in total assets.

The proposed merger will be put to both groups of members for approval in the first half of 2022.

Beyond Bank, South West Credit Union flirt with merger

The two groups declared the potential merger in November, stating they would benefit from combining South West Credit Union’s 13,000-odd members in Warrnambool, Victoria, with Beyond Bank’s 275,000 customers and $8 billion in assets under management.

MoneyMe to acquire SocietyOne

Non-bank lender MoneyMe announced that it is set to acquire SocietyOne for approximately $132 million.

The two brands are expected to continue to run separately as part of the deal, which aims to "harness SocietyOne’s strong brand recognition as a pioneer in disruptive personal lending, with MoneyMe’s leadership in product innovation, efficiency and customer experience through its proprietary technology platform" (Horizon).

It would also bring "complementary distribution capabilities" spanning across direct digital, direct traditional, broker, agent and dealer, as well as delivering improved data and funding opportunities. The deal could also see MoneyMe benefit from SocietyOne's banking partnership with Westpac.

Completion of the acquisition of SocietyOne is subject to certain conditions, including shareholder approval, and - if all conditions are met - would complete on 15 March 2022. 

As well as major changes in the lending space, a vast amount of mergers took place in the aggregation space, too. Find out more on our sister title, The Adviser.

[Related: The Year in Review]

How the shape of the mortgage industry changed in 2021
mortgagebusiness

Annie Kane

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. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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