Bank of Queensland (BOQ) has agreed to fully acquire Members Equity Bank (ME Bank) in a cash deal valued at A$1.33 bn ($1.05 bn) to bolster its retail banking business.

ME Bank was formed in 1994 by a group of 26 Australian superannuation funds. It is currently operating digitally without any physical branches.

BOQ chairman Patrick Allaway said: “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.”

This deal is expected to double BOQ’s retail bank deposits to more than A$56 bn and increase earnings contribution from retail banking from 36% to 50%.

BOQ MD and CEO George Frazis said: “Critically, ME Bank delivers material scale, broadly doubles our Retail bank, and provides geographic diversification.

“The ME Bank brand is also a great fit with the BOQ and Virgin Money brands, creating customer-centric alternatives in Australia.”

ME Bank chairman James Evans said: “We are pleased that under the proposal, the ME Bank brand and operations will be maintained.

“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.”

The acquisition is expected to be completed by the end of BOQ’s 2021 financial year and is subject to regulatory approval.

Bank of Queensland (BOQ) is a regional bank in Australia founded in 1874 and has over 160 branches across the country.

In December last year, BOQ has partnered with Fiserv to further its digital strategy.