NAB currently holds around 18.3% stake in 86 400, and has proposed to acquire the remaining shares through a scheme of arrangement
National Australia Bank (NAB) has reached a scheme implementation agreement to take full control of the holding company of Australian neobank 86 400.
In late 2020, NAB has initiated its discussions with 86 400, and has subscribed for a minority stake in the company, to support its growth.
NAB currently holds around 18.3% stake in 86 400, and has proposed to acquire the remaining shares in the firm, through a scheme of arrangement.
The Australian bank is expected a pay a total cost of up to nearly A$220m, in exchange for acquiring the remaining stake in 86 400 along with other upfront transaction.
86 400 has developed and launched a mobile-based digital bank, which has been granted an ADI licence in July 2019.
The company had more than 85,000 customers, A$375m in deposits, A$270m in approved residential mortgages and 2,500 accredited brokers, as of 15 January 2021.
In April 2020, NAB has unveiled its plans to prioritise UBank to deliver a digital experience and new product propositions to customers.
With the acquisition of 86 400, UBank is anticipated to advance its growth, by combining its established customer base, brand and colleagues with 86 400’s experience and technology.
Until the transaction is completed, both 86 400 and UBank are planned to continue their operations as individual businesses.
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.
“The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers.”
The transaction is expected to be closed, subject to certain conditions including regulatory approvals from the Australian Prudential Regulation Authority (APRA), the Australian Competition and Consumer Commission (ACCC), and the Federal Court, in mid-2021.
UBank CEO Philippa Watson said: “UBank has a proud 12-year history of innovation as a pioneering digital bank and today serves more than 600,000 customers to help achieve their financial goals.
“Combining with 86 400 will bring together UBank’s established business and 86 400’s experience and technology platform to meet the changing needs of our customers. We are looking forward to having the 86 400 team join us to deliver the next generation of simple, fast and mobile banking solutions.”