ME Bank has agreed to a $1.325 billion takeover from Bank of Queensland, believing it will create a genuine alternative to the big four banks.
Under the acquisition, which is expected to be finalised by August, ME’s Melbourne-based presence will be retained and existing customers’ account arrangements will not be changed.
Commenting on the takeover, global credit rating agency Standard & Poor’s said the move should consolidate BOQ’s competitive position through increased geographic diversity and scale of operations.
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 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,” ME Bank chairman James Evans said.
Mr Evans said BOQ and ME were a natural fit, both being homegrown banks with a range of simple and easy to understand banking products.
“They both offer a genuine alternative to the big banks,” he said.
BOQ said the acquisition would be funded by an underwritten capital raising of $1.35 billion.
The combined group will have total assets of more than $88 billion and total deposits of about $56 billion.
“Today’s announcement is another major step in our strategy to be the leading customer-centric alternative to the big banks,” BOQ chairman Patrick Allaway said.
“With the addition of the ME Bank business, BOQ now has material scale and a compelling growth platform to support this ambition.”
S&P said on balance it expects BOQ’s franchise strength, market share, and pricing power post-acquisition to remain broadly similar to its regional bank peers.
“… though significantly weaker than the major Australian banks that dominate the sector,” it said in a statement.
Faced with the takeover, Finance Sector Union national secretary Julia Angrisano said its focus would be on securing the best job security outcomes for ME staff.
The union wants a 12-month moratorium to protect jobs, a commitment to redeployment opportunities across the broader Bank of Queensland Group and that the bank does the right thing by ME Bank employees.
“It is important that the new owners recognise that while they are buying the trusted ME brand, the bank’s loan book and its depositors’ accounts, it is also taking over the livelihoods of the staff,” Ms Angrisano said.