Bendigo and Adelaide Bank buys Macquarie margin lending portfolio
Bendigo and Adelaide Bank Limited (BEN) has announced its purchase of a c$1.5 billion margin lending loan portfolio from Macquarie Group Limited (Macquarie) for $52 million. The purchase means Bendigo and Adelaide Bank – through its margin lending business Leveraged Equities – will further consolidate its position as one of the three largest providers of margin lending products in Australia, with more than $3.6b of loans under management.
This acquisition helps Leveraged Equities meet its long-held strategic goal of expanding into the fast growing financial adviser market. The agreement consolidates relationships with more than 3000 independent financial advisers in addition to the existing broker distribution networks in which LE is dominant.
The purchase also coincides with the signing of a three year white label distribution agreement with Macquarie Private Wealth.
The purchase will be funded through the issue of $52m of short dated convertible preference shares to Macquarie. The issue of these shares, and the acquisition of the Macquarie portfolio, will take BEN’s Tier One capital position to approximately 7.8%1, while Total Capital moves to approximately 10.6%1. The announcement follows the recent $190m capital raising by Bendigo and Adelaide Bank, which provided additional flexibility for expansion organically and through acquisition.
BEN expects the acquisition to be earnings per share positive in its first year of operation.
Bendigo and Adelaide Bank’s Chief Executive – Partner Advised Banking, Jamie McPhee, said the Bank was delighted to strengthen the existing relationship between Leveraged Equities and Macquarie Private Wealth.
“Leveraged Equities already enjoys a strong relationship with Macquarie as one of its preferred margin lending providers, and this acquisition strengthens and reinforces that relationship,” Mr McPhee said.
“We see a strong future for margin lending in Australia as an important strategy for our customers to be able to build a strong and diversified personal balance sheet.
“This is an ideal opportunity to cement our position as the industry leading independent margin lender of choice,” he said.
Bendigo and Adelaide Bank Managing Director Rob Hunt said the acquisition further expanded and strengthened this important part of the business.
“Lending against this asset class is an important capability for both our direct customers and those of our partner advised businesses,” Mr Hunt said. “We see Leveraged Equities, our margin lending business, as a vital and strategic long-term part of the Bendigo and Adelaide Bank group.”
1. Pro-forma capital position after CPS have converted to Ordinary Shares.