)
After selling its insurance business this year for $855 million, RACQ has now offloaded its retail lending and deposit business to Bendigo Bank and Adelaide Bank (ASX: BEN), boosting the regional banking group’s loan portfolio by $2.7 billion.
The deal, which also includes the transfer of about $2.5 billion in retail deposits, will see more than 90,000 RACQ banking customers transition to Bendigo Bank which says the acquisition will contribute positively to its 2030 return-on-equity target.
The Bendigo Bank group currently has about 2.9 million customers, a loan book of $85.9 billion and customer deposits of $72.9 billion.
The purchase price will be based on the book value of RACQ Bank’s transferring book upon completion of the deal.
RACQ’s group CEO David Carter says the sale benefits its banking members due to the scale, technology and investment capabilities of Bendigo Bank.
“Like RACQ, Bendigo Bank is one of Australia’s most trusted brands and shares our deep commitment to supporting its communities right across Australia,” says Carter.
“Bendigo Bank is also an industry leader in providing innovative banking solutions including the unique community bank model and Australia’s first and best digital bank, Up.”
The acquisition, which remains subject to regulatory approval, will deliver Bendigo Bank net interest income of between $50 million to $55 million, based on the transferring book at the end of FY25.
The cost of servicing the transferring book is targeted to be between $12 million and $14 million before tax, which includes some transferring employees.
The estimated migration and transaction costs of $25 million to $30 million after tax will largely be incurred prior to completion of the transaction.
“RACQ Bank's strong deposit franchise and member focus complements Bendigo Bank's own deposit franchise and longstanding focus on our customers and the community,” says Bendigo Bank CEO Richard Fennell.
“This acquisition leverages our proven ability to efficiently integrate significant portfolios and is expected to drive improved shareholder returns through cost efficiencies and geographic diversification."
RACQ says the sale will benefit its bank members by being part of a larger group with enhanced investment in face-to-face and digital banking services. The Bendigo Bank group supports more than 400 branches nationally with most in regional areas and 75 branches in Queensland.
“While RACQ Bank has achieved quality growth since its inception in 2016, for us to deliver the best banking experience for our members, significant ongoing investment is needed to meet the growing demand for digital banking, maintain a competitive position and meet regulatory requirements,” says Carter.
“We concluded that it was in the interests of our members to find a better banking solution to meet their needs over the longer term.
“Bendigo Bank has invested strongly in enhancing its products and services while improving its technology to meet the increasing demand for online banking and digital services.”
Carter says there will be a seamless transfer for RACQ Bank members to Bendigo Bank, with all bank members guaranteed to keep their membership with RACQ for 12 months post completion.
The sale of RACQ Bank follows the automobile membership group’s sale of its RACQ Insurance business to Insurance Australia Group (ASX: IAG) for $855 million after the deal was approved by the Australian Competition and Consumer Commission in May this year.
“This transaction, together with RACQ’s strategic partnership with leading insurer IAG, enables the club to simplify its business operations and invest in its 2032 strategy which is focused on helping Queenslanders to move and live safely, securely and sustainably,” says RACQ president and chair Leona Murphy.
“We’re undergoing a technology transformation, investing in a modern, secure, AI-enabled platform to deliver more personalised member experiences.
“At the same time, we’re exploring new products and services for our members, focused on scaling our solar and battery business, expanding our mobility and automotive services and growing our presence in travel.”
Murphy says RACQ is also boosting its work in local communities through a new dedicated fund valued at more than $100 million.
“The focus will be to help address some of the biggest challenges facing our state with road safety front and centre, as well as the transition to electrification and building resilience in our communities through volunteering,” she says.
)
