Deal could see huge mortgage book added to major's existing business
ANZ is considering a deal to snap up regional lender ME Bank – a deal that has reportedly dismayed smaller lenders.
Melbourne-based ME Bank, owned by industry super funds, has been on the auction block for months – but a sale to a major bank could raise questions for regulators and Treasurer Josh Frydenberg, The Australian reported. A sale to one of the big four would further bolster the majors’ dominance of retail banking.
ME Bank has a mortgage book of $15.6 billion and $9.6 billion in deposits, according to The Australian. The bank doesn’t have a branch network, instead selling loans online and through mortgage brokers.
ANZ’s competition for ME Bank reportedly includes two regional banks, Bendigo and Adelaide and Bank of Queensland, and a neobank-linked private equity consortium.
ANZ is facing pressure to regain lost market share in mortgages and household deposits. Snapping up ME Bank could solve that problem in a stroke. ANZ is also in a better financial position to buy the bank than its regional competitors. ME Bank has a book value of about $1.25 billion, and the regional banks would need to raise funds for a takeover, The Australian reported.
Read more: Melbourne-based bank said to eye sale
However, the idea of selling out to a major bank has reportedly given rise to heated debate among ME’s board members, since the union-backed industry super fund movement is ideologically opposed to the big banks.
A sale to ANZ could also raise regulatory issues. After the Global Financial Crisis, the Australian Competition and Consumer Commission greenlighted the takeovers of St George by Westpac and Bankwest by Commonwealth Bank. Both of those approvals were slammed as missed opportunities to increase competition, The Australian reported.
And ME Bank isn’t the only smaller player about to be snapped up by a major. Last week, NAB announced it would purchase neobank 86 400 – a plan the ACCC said it would “carefully scrutinise” but didn’t squash outright.
