Bendigo Bank, IOOF alliance
Bendigo Bank and IOOF today announced they have reached agreement to form a working alliance.
As part of the alliance, the companies will form a 50/50 joint venture to provide Bendigo Bank clients with funds management and advisory services.
IOOF will sell its Building Society to Bendigo Bank for $20 million cash plus 3.7 million ordinary shares in Bendigo Bank, making IOOF a significant shareholder with 5.9 per cent of issued capital.
Both IOOF and Bendigo Bank will continue to operate their core businesses independently. Other forms of future co-operation are contemplated.
The two companies will now proceed to formal contracts and will seek appropriate regulatory approvals as soon as possible.
Managing Directors Rob Hunt (Bendigo Bank) and Rob Turner (IOOF) said it was a win-win for both organisations' customers.
Bendigo Bank clients will receive through the joint venture the funds management expertise of IOOF, whilst IOOF, as a shareholder in Bendigo Bank, can now provide to its members access to a larger branch network and a wider range of banking services.
Both organisations' customers clearly benefit from the partnership, with the alliance bringing together nearly 300 years of financial experience and reputation. IOOF, founded in 1846, and the Bendigo Bank, 1858, are two of Australia's oldest and best-known financial institutions.
Bendigo Bank is Australia's only regionally-based bank, providing a wide range of banking and financial services to households, consumer markets and small to medium-sized businesses.
Listed on the Australian Stock Exchange, it has an extensive branch network throughout Victoria and southern NSW, offices in each mainland capital, total bank assets in excess of $3.4 billion and more than $600 million in funds under the management of subsidiary Sandhurst Trustees.
The IOOF Group is a mutual organisation serving approximately 300,000 members with total assets under management, administration and advice of approximately $6 billion.
With a core business of funds management and financial advisory services, the IOOF Group has a range of investment products and services, including unit trusts, superannuation, rollover investments, investment bonds, trustee and master fund services.
It is expected that the IOOF branch network will be converted to Bendigo Bank branches in July 1999.
Mr Turner said the agreement marked a ground-breaking alliance between a progressive retail bank and a dynamic funds management organisation.
"There is an excellent customer service and cultural fit between the two organisations which makes for a successful alliance.
"Bendigo Bank's investment in leading edge technology, its branch network and its people makes it an excellent choice to help IOOF members meet their retail banking needs. We anticipate that IOOF members will embrace this alliance and enjoy these benefits.
"By adopting an alliance with IOOF, Bendigo Bank is giving our investment product range, administrative skill and distribution expertise a big tick. It's also a big vote of confidence in IOOF's ability as a funds manager and as a provider of sound financial advice.
"As a member-owned mutual organisation, we are providing our members with an enhanced range of banking services from a progressive retail bank. One of the finer qualities of this alliance is that IOOF members, through our equity stake in Bendigo Bank, will share in the Bank's progress, with the IOOF Group as a significant shareholder.
"Our investment products such as the Balanced PST Investment Fund have consistently rated in the upper quartile of super funds over 1, 2, 3 and 4-year periods.
"We have a very strong investment and management team in place with first-class systems and processes producing excellent results and giving us a clear edge.
"Consistently strong investment performance is being rewarded by a strong growth in business", Mr Turner said.
Mr Hunt said the alliance will leverage the skills of both organisations.
"It marries Bendigo's demonstrated retail banking skills with IOOF's formidable funds management expertise and will produce benefits for the customers of both parties.
"We will be able to offer funds management products and advisory services to our customers and we will use Bendigo's banking skills to meet the needs of IOOF members.
"It is very positive for both organisations and our customers and in line with the stated objectives of both companies for the future.
"We look forward to working together to improve services to all customers," Mr Hunt said.