SYDNEY – Bendigo and Adelaide Bank (BEN.AX) announced an agreement to acquire the retail lending assets and deposits of RACQ Bank, a move aimed at boosting its geographic diversity and shareholder returns.
The deal, subject to regulatory approval, involves the transfer of about A$2.7 billion ($1.8 billion) in retail loans and A$2.5 billion in retail deposits from RACQ Bank, a Queensland-based mutual bank owned by a motoring club.
The acquisition, to be funded from cash reserves, is expected to be completed in the first half of 2027 at book value and will consume roughly 35 basis points of the bank’s common equity tier 1 capital.
Bendigo Bank, Australia’s fifth-largest retail bank, said the transaction aligns with its strategy and would contribute positively to its 2030 return-on-equity target. It will increase the bank’s exposure to Queensland’s residential lending market to 18% from 15%.
“RACQ Bank’s strong deposit franchise and member focus complements Bendigo Bank’s own deposit franchise and longstanding focus on our customers and the community,” the bank said in a statement released ahead of an investor update.
The lender said it expected the deal to add between A$50 million and A$55 million in net interest income, based on the portfolio’s status at June 30, 2025. It forecast an annualised increase in return on equity of 35-40 basis points and a rise in cash earnings per share of 4-5 Australian cents.
Integration costs are estimated at A$25 million to A$30 million after tax, with most incurred before completion. The bank said its ongoing shift to a single core banking system by end-2025 would enable efficient integration.
RACQ Bank, which serves over 90,000 customers, is owned by the Royal Automobile Club of Queensland. The sale is part of RACQ’s strategy to focus on its core motoring, insurance, and membership services.
Bendigo Bank shares were up 0.4% in early trade, in line with the broader financial index.
($1 = 1.5097 Australian dollars)