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Bendigo Bank pulls back on Elders and Homesafe investments

In a significant shift in its investment strategy, the non-major bank has ended its relationship with Elders and divested its shareholding in Homesafe Solutions.

Bendigo and Adelaide Bank Limited has been streamlining some of its investments recently, having ended or reduced two partnerships in recent months.

In December, it was revealed that Rural Bank – a division of the Bendigo and Adelaide Bank Group – had ended its relationship agreement with Elders Rural Services Australia Limited, a subsidiary of Elders Limited.

The move ended the three-year agreement in connection with the origination and referral of Rural Bank’s loan and deposit products. The partnership has been a lucrative one for Elders, contributing approximately $11.3 million to the gross margin of its Financial Services business in the financial year 2023.

A deed terminating the relationship agreement was issued in December, with Bendigo and Adelaide Bank paying Elders $17 million and both parties being released from their obligations.

In a statement, the non-major banking group said: “Rural Bank and Elders have both agreed to end the partnership through which Rural Bank products and services were provided through the Elders network.

“Rural Bank will continue to support the banking needs of its customers alongside any new customers in regional and rural Australia through our vast network of branches and agri bankers.

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“We maintain our commitment to offer financial solutions for primary producers built on our agribusiness insights and expertise.”

Speaking last month, Elders managing director and chief executive Mark Allison commented on the cessation, acknowledging the successful history with Rural Bank, but emphasising the need to evolve with the changing needs of their customers.

[A]s the needs of our customers have developed, so too must our business strategy,” he said.

“We look forward to building on our already successful financial services business to provide our customers with the financial products they need to improve their productivity.

Homesafe divested

In another strategic move, Bendigo and Adelaide Bank Limited has also recently announced a restructure of its Homesafe investments, a business that provides a debt-free equity release solution for older Australians.

Since its launch in 2005, Homesafe Solutions Pty Ltd has helped senior home owners in Melbourne and Sydney to access the equity in their homes without the need to downsize or take out a reverse mortgage.

The Homesafe Debt Free Equity Release (which subsequently changed to Homesafe Wealth Release®) was first launched as a pilot through Bendigo Bank to older Australians across Melbourne and Sydney. Bendigo, via the Homesafe Trust, would invest in a portion of the future sale earnings of the home. As the house gains value over time and is sold, the bank gains from these property value increases.

While the banking group had reportedly been looking for a buyer for Homesafe, it was revealed on 21 December that the banking group had restructured its Homesafe investments.

Under the restructure, it divested its shareholding in Homesafe Solutions Pty Ltd (the manager of the Homesafe business) to its joint venture partner – Athy Pty Ltd (a private company controlled by actuary Peter Szabo) – and acquired the equitable interest in the existing Homesafe portfolio directly onto its balance sheet.

The banking group has, however, agreed to continue to fund new Homesafe contract originations for a further period up to 30 June 2024 while Homesafe seeks other funding arrangements.

The moves came amid a major strategic shift at Bendigo and Adelaide Bank Limited.

In late 2023, the group began shifting its broker distribution focus to Bendigo Bank.

While Adelaide Bank has traditionally been the brand under which brokers have distributed loans, Bendigo Bank turned on third-party channel distribution as part of its ongoing “transformation journey” through Finsure brokers - with more aggregator partnerships coming online later this year.

It is expected that the Adelaide Bank brand will be mothballed as the Bendigo Bank Broker offering progresses, with the Adelaide Bank brand transitioning to retirement from late 2024.

However, the bank will continue to service Adelaide Bank customers as it transitions to Bendigo Bank.

[Related: Bendigo ramps up preparations for broker launch]

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