- The Bank of Queensland (BOQ) is taking stepping up its battle against the Big Four with its acquisition of ME Bank for almost $1.33 billion
- The addition of ME Bank is expected to double the size of BOQ's retail business and expand its East Coast presence
- It forms part of the multi-year, multi-brand transformation strategy that was unveiled in February 2020
- BOQ intends to fund the acquisition through a $1.35 billion capital raising, consisting of a non-renounceable entitlement offer and an institutional placement
- Bank of Queensland was placed in a trading halt on Thursday, February 18, which is expected to remain in place until Thursday, February 25, or upon the completion of the capital raising
The Bank of Queensland (BOQ) is taking stepping up its battle against the Big Four with its acquisition of ME Bank for almost $1.33 billion.
Patrick Allaway, Chairman of BOQ, said the purchase "is another major step in our strategy to be the leading customer-centric alternative to the big banks."
"With the addition of the ME Bank business, BOQ now has material scale and a compelling growth platform to support this ambition," he added.
ME Bank is expected to double the size of BOQ's retail business and increase retail earnings contribution from around 35 per cent to more than 50 per cent. On top of that, the anticipated increase in customers — particularly on the East Coast — means BOQ can provide a "genuine banking alternative" to roughly 1.45 million people.
Upon completion of the transaction, BOQ will have pro forma total assets in excess of $88 billion and total deposits of more than $56 billion, with pre-tax annualised synergy benefits between $70 million and $80 million expected within three years.
The acquisition of ME Bank forms part of BOQ's multi-year, multi-brand digital transformation strategy that was unveiled in February last year.
"It is an exciting day to see two strategically and culturally-aligned businesses come together and we look forward to continuing to build ME Bank's strong brand, accelerate growth and create new opportunities for our people and the Group," said George Frazis, Managing Director and CEO of BOQ.
"We are on track with our strategic transformation and we anticipate that the combination of the two businesses will enable us to accelerate our digital strategy towards a cloud based common digital retail bank technology platform," he added.
In order to fund the acquisition, BOQ will carry out an underwritten one-for-3.34 accelerated pro-rata non-renounceable entitlement offer to raise $1 billion and an underwritten institutional placement to raise a further $350 million.
All of the shares issued under both components will be offered at a price of $7.35 per share, which represents a 12.6 per cent discount compared to BOQ's closing price of $8.41 per share on February 18.
BOQ said it is currently on track for a strong year, with an 8 to 10 per cent growth in cash net profit expected for the first half of 2021 as well as a 60 to 65 per cent increase in statutory net profit.
Bank of Queensland was placed in a trading halt on Thursday, February 18, and is expected to halted until Thursday, February 25, or upon the completion of the capital raising.