Snapshot for week beginning 24 January. It was a busy week for banking dealmakers. They were involved in 16 debt offerings valued nearly $4.4bn, 8 acquisitions totalling $362m, and 8 venture financing of $669m.
Almost half of the deals took place in Asia-Pacific, with North America coming a distant second.
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The weekly crown goes to an Australian financial giant who has designs on a robust neobank to further its own digital transformation.
National Australia Bank (NAB) is one of the four largest financial institutions in Australia in terms of market capitalisation, earnings, and customers.
NAB was ranked 21st largest bank in the world measured by market capitalisation and 52nd largest bank in the world as measured by total assets in 2019.
The coveted startup is none other than Neobank 86 400, a licensed bank that operates solely through smartphone apps.
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By GlobalDataIt also launched the first “digital mortgage” for brokers in November 2019, with December 2020 its biggest ever month for home loan applications.
Deal of the week: National Australia Bank to Acquire 86 400 Holdings
NAB has announced that it has entered a deal to acquire 100% of 86 400’s shares for up to $220m, subject to approval by shareholders and regulators.
If the purchase goes through, Neobank 86 400 will fold into UBank, NAB’s digital-only subsidiary.
The banks say the move is designed to “accelerate growth”, with 86 400 saying NAB’s backing would allow it to boost customer numbers and its balance sheet in a way that would have otherwise taken five years.
The neobank currently has over 85,000 Australian lending and deposit customers who hold $357m in deposits. The customers also hold $270m in approved residential mortgages.
The digital bank has relationships with 2,500 accredited mortgage brokers.
UBank has more than 600,000 customers but no brokers on its books and NAB around 9 million customers.
86 400 CEO, Robert Bell, said:
“The implementation of the scheme requires approval from shareholders, regulators, and the courts. So, it’ll be business as usual for some time and 86 400 will continue to operate as a separate business, run by our dedicated team from our headquarters in Sydney.”
Incumbent banks developing world-class digital capabilities at lower costs
To avoid falling behind in the race for digital transformation, many incumbent backs have acquired digital banks.
New technologies have been revolutionising customer experience across a variety of sectors, creating a dire need for all banks to embrace digital transformation.
For a long time, incumbent banks were digital laggards, partly as a result of the highly regulated industry in which they operate and partly because senior decision makers were slow to recognise the potential ROI.
But times have changed.
We are now entering a critical new phase in which intelligent machines are enabling – indeed, compelling – banks to fundamentally see and do everything differently.
With the growing threat of fintech firms increasingly gaining traction with consumers due to the accessibility, flexibility, and availability of the financial products which they provide, incumbent banks now have a significant incentive to accelerate the move into the digital age.
This accelerated digital change, combined with the low-rate environment and cost pressures, are likely to contribute to making 2021 a year of increasing banking deals.
