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The prudential regulator has granted approval for the major bank to fully acquire neobank 86 400.
The Australian Prudential Regulation Authority (APRA) has granted approval to National Australia Bank Ltd (NAB) to hold a 100 per cent stake in 86 400 Holdings Ltd and 86 400 Ltd.
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In January of this year, the big four bank announced its intentions to buy the two-year-old neobank for $220 million, with plans to merge the neobank with its own digital subsidiary, UBank.
It is anticipated that the merged entity would see UBank expand its reach into the third-party channel for the first time.
As per section 14(1)(a) of the Financial Sectors (Shareholdings) Act 1998, approval must be sought to satisfy the requirement that it is in the national interest for a company to hold more than a 15 per cent in a company.
APRA’s approval has now been had, but is subject to the relevant scheme of arrangement between 86 400 Ltd and its members receiving court approval under Part 5.1 of the Corporations Act.
NAB and UBank welcomed the APRA announcement, with UBank CEO Philippa Watson stating that it was “another important milestone” in the merger.
“We are pleased with APRA’s decision and we continue to work towards progressing the completion of the transaction that will deliver a market-leading digital experience to our customers,” Ms Watson said.
The transaction, which took a step closer to completion last month after the Australian Competition and Consumer Commission (ACCC) said it would not oppose the deal, is expected to complete by “mid-calendar year 2021”.
Speaking to the House of Representatives standing committee on economics earlier this month, NAB chief executive Ross McEwan said that he believed the acquisition would build competition in the lending market.
He said at the time: “They were comfortable selling to us because they saw the opportunity of growing that business with our capital and liquidity behind their technology and moving across the UBank customer and brand across to actually create another competitor in the marketplace that had the wherewithal to compete.”
“And if you have a look across their business, even over a 10-year period, its growth ambitions was 1 per cent of the mortgage market. We believe that with 86 400’s technology and our resources, we can create a good competitor in their marketplace that will be better than them standing on their own or UBank doing so.”
He continued: “We believe putting those two together, we will actually push [UBank] back to being a really good competitor in this marketplace, in fact giving it more competition,” Mr McEwan said.
“[T]here are actually a number of fintechs that will grow because of what we are doing, because they will have a bigger volume, more capital going in, that will actually help probably five or six fintechs that underpin at 86 400, to expand and grow themselves,” Mr McEwan said.
“Now, we’re not doing this to crush any party getting bigger, we’re actually saying we can create more competition in this marketplace.”
86 400 and UBank will continue to operate as separate businesses until the transaction is finalised.
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