NAB buys neobank 86 400 in $220m deal
National Australia Bank is buying out the neobank 86 400 as it looks to ramp up growth through its offshoot UBank, in a $220 million deal aimed at enhancing NAB’s digital banking offer.
NAB says the acquisition will enhance its digital banking offer.Credit:Fairfax Media
NAB told the ASX on Friday morning it had entered into a deal to acquire all of the shares of 86 400, which was founded by payments business Cuscal, one of several start-up banks that were seen as potential future threats to the big four. 86 400′s independent directors have unanimously recommended their shareholders support the deal.
NAB, which will need to win the approval of regulators, has already bought an 18.3 per cent stake in 86 400 at its most recent capital raising, it emerged on Friday.
86 400, which received its banking licence in 2019, said NAB was paying a premium to what investors paid in a recent capital raising and the buyout would fast-track the bank’s growth.
NAB chief operating officer Les Matheson said: “Bringing together UBank and 86 400 is consistent with NAB’s long-term strategy and growth plans and will enable us to develop a leading digital bank that can attract and retain customers at scale and pace.”
86 400 chief executive Robert Bell said joining forces with NAB would give the bank the scale, funding and capital to accelerate its growth.
“This will significantly fast-track our growth, propelling our business, customer numbers and balance sheet to a position which would’ve otherwise taken five years,” Mr Bell said.
NAB said 86 400 had $375 million in deposits and $270 million in mortgages, and the deal would allow UBank to combine its customer base with 86 400′s technology platform.
It comes months after another neobank hopeful, Xinja, was forced to return deposits to customers after it failed to raise the capital it needed to continue operating.
The proposed deal also comes amid concerns from the Australian Competition and Consumer Commission over potential big four bank acquisitions of fintech rivals, though others have argued the banks should not be restrained from investing in technology through acquisitions.
ACCC chairman Rod Sims this week told the Sydney Morning Herald and The Age the regulator would apply close scrutiny to big bank takeovers of potential disrupters, and it would look more favourably on investments from second-tier banks.
As well as ACCC approval, the deal will require approval from the Australian Prudential Regulation Authority and the federal treasurer.
More to come
Clancy Yeates is a business reporter.