This ramps up BoQ’s competitiveness via increase geographic diversity and scale of operations.
Australia’s Bank of Queensland (BoQ) has unveiled its plan to acquire 100% of Members Equity Bank (ME Bank) for over US$1.02b (A$1.3b).
In the bank’s bourse filing, BoQ managing editor and CEO George Frazis shared that the acquisition will drive the group’s pro forma total assets over A$88b, with total deposits of more than A$56b.
The acquisition will be funded by an underwritten capital raising of $1.35b. BOQ plans to complete the acquisition before the end of its 2021 fiscal year.
In a media note, S&P Global Ratings notes that the move should consolidate BoQ’s competitive position through increased geographic diversity and increased scale of operations.
It is not expected to have a significant positive or negative impact to BoQ, with S&P noting that the bank’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.
“In our view, BoQ's intent to maintain the ME Bank brand has the potential to be successful within BoQ's existing multibrand strategy. We believe each brand would have distinct target markets, including BoQ's existing retail offerings under the Virgin Money and BoQ Blue brands,” said S&P analysts Mark Symes, Nico DeLange, and Lisa Barett.
The analysts also don’t anticipate a change in BoQ's stated regulatory capital targets. It is projected to maintain a risk-adjusted capital ratio between 10%-15% over the next two years.
(A$1 = US$0.79)
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