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Bank of Queensland to acquire ME Bank, pushes to compete with big four

Bank of Queensland to acquire ME Bank, pushes to compete with big four

Bank of Queensland has revealed a $1.325 billion deal to purchase ME Bank, in a statement to the Australian Stock Exchange today. 

Bank of Queensland (BOQ) confirmed the plans to acquire industry fund-owned ME Bank in an effort to compete with the big four banks and “balance out” its presence on the east coast.

BOQ Chairman, Patrick Allaway, stated: “Today’s announcement is another major step in our strategy to be the leading customer-centric alternative to the big banks.” 

“With the addition of the ME Bank business, BOQ now has material scale and a compelling growth platform to support this ambition. 

“The combination of our highly complementary businesses brings together two organisations with a shared purpose and values generating greater value for customers, employees and shareholders,” said Mr Allaway.  

Pending regulatory approval, ME Bank will join the previously acquired Virgin Money Australia in 2013. 

For BOQ, the move will double the size of its retail banks, increase the value of mortgages to $75 million and grow its customer base to 1.5 million, revealed Managing Director and CEO, George Frazis. 

“The acquisition of ME Bank will create a compelling alternative to the big four banks,” said Mr Frazis.

The move has been endorsed by ME Bank’s shareholders, represented by 26 industry super funds. 

ME Bank Chairman, James Evans, said: “This agreement brings together two culturally aligned organisations to form what will be an enhanced and influential banking alternative for customers.”

Home loan customers to get best of both worlds

Currently, 75 per cent of ME Bank customers are funnelled through third-party brokers. Mortgages are its largest source of revenue.

The acquisition will see BOQ able to provide a greater choice to different customer segments looking for a home loan.

“What’s really important for us is to help more Australians into homes. Different segments have different needs,” said Mr Frazis.  

“Bank of Queensland [customers] require a more personal touch, which is why branch managers are important. Virgin Money is all broker and ME Bank is primarily broker.”

Those that enjoy face-to-face customer service will still be able to be serviced by BOQ branch managers. Younger Australians who prefer to do their banking on their phones or laptops can seek comfort with Virgin Money and ME Bank online platforms.  

Mr Frazis also touched on the launch of its “state-of-the-art” cloud-based banking system to be launched next month. This new system should allow BOQ, Virgin Money and ME Bank to seamlessly let brokers track home loan applications and let customers make changes with a shorter turn-around.

What does this mean for ME Bank customers?

Put simply, it will be business as usual for ME Bank customers, as confirmed by the banks’ Chairman, James Evans.

“ME customers will be able to enjoy the same simple and straightforward products and services we know they expect from ME Bank, along with the additional benefits of being part of a bigger bank,” said Mr Evans. 

But it’s worth keeping in mind that customers may have more options when it comes to refinancing mortgages or even opening a new bank or savings account.

Customers will still need to meet any eligibility criteria, but thanks to the implementation of its cloud-based banking system next month, an ME Bank customer may find opening a BOQ savings account, for example, a much easier and potentially streamlined process.

For example, Bank of Queensland currently offers one of the most competitive savings account rates on the market for younger Australians. Those aged 14-24 can apply for the Fast Track Starter Account with a whopping 3 per cent bonus interest rate.

Home loan customers may be interested to know how BOQ and ME Bank’s interest rates stack up against each other too, while the news of just how much of ME Bank’s home loans are funnelled through brokers may mean that those applying for a home loan through ME Bank may be well advised to consider their own broker, or just simply shop around for their best rate all the same.

Lowest owner-occupier principal & interest home loans:

Lowest rateVariable1 year fixed2 year fixed3 year fixed4 year fixed5 year fixed
ME Bank2.49%2.19%1.99%2.09%2.69%2.69%

Source: RateCity.com.au. Data accurate as of 22.02.2021.

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