Australia markets closed

    -32.00 (-0.42%)
  • ASX 200

    -27.60 (-0.37%)

    -0.0037 (-0.51%)
  • OIL

    +0.65 (+0.89%)
  • GOLD

    +0.80 (+0.05%)

    -843.96 (-1.43%)
  • CMC Crypto 200

    -35.86 (-3.25%)

    -0.0018 (-0.30%)

    +0.0031 (+0.30%)
  • NZX 50

    -46.37 (-0.35%)

    +13.10 (+0.09%)
  • FTSE

    -26.87 (-0.38%)
  • Dow Jones

    +33.18 (+0.10%)
  • DAX

    -112.22 (-0.72%)
  • Hang Seng

    -318.82 (-1.30%)
  • NIKKEI 225

    +609.41 (+2.06%)

NAB buys digital bank in $220m deal

·2-min read
A logo of National Australia Bank is seen out their office in the central business center of Sydney on May 7, 2015.  National Australia Bank announced the country's biggest ever rights issue to raise 4.4 billion USD while detailing plans to demerge its British banking business. AFP PHOTO / Saeed Khan        (Photo credit should read SAEED KHAN/AFP via Getty Images)
NAB buys bank in $220m deal: 85,000 Aussies implicated. Source: Getty

Big four bank NAB has revealed it will buy out digital bank 86 400 – the first online bank to offer home loans without paperwork – in a bid to grow its UBank offering.

The acquisition, which has been in the works since late 2020, will see see 86 400’s customer base, brand, colleagues and technology platform combined with UBank’s.

NAB already had a minority stake in the digital bank, but will now acquire 100 per cent of shares, which will cost the bank around $220 million.

“Bringing together UBank and 86 400 is consistent with NAB’s long-term strategy and growth plans and will enable us to develop a leading digital bank that can attract and retain customers at scale and pace,” NAB chief operating officer Les Matheson said in a statement.

86 400 chief executive Robert Bell said customers would benefit from NAB’s capital and balance sheet strength and investment spend.

“This will significantly fast-track our growth, propelling our business, customer numbers and balance sheet to a position which would’ve otherwise taken five years,” Bell said.

“Coming together with UBank gives us the scale, funding and capital to dramatically accelerate our growth and reach even more Australians with our smarter approach to banking,” added 86 400 chairman Anthony Thomson.

“It means we’ll be able to invest even more into developing smart products, experiences and services, helping our customers own their home faster and reach their goals sooner with smarter spending and saving.”

All of 86 400’s independent directors recommended shareholders vote in favour of the scheme, but completion of the transaction is still subject to regulatory approvals.

Future of neobanks in question as Xinja folds

The merger comes a month after digital-only bank Xinja announced it closed its savings and transactions accounts, leaving around 47,000 account-holders in the lurch.

The bank blamed COVID-19 conditions, saying it was “an increasingly difficult capital-raising environment”.

Payments industry veteran Bradford Kelly told Stockhead Xinja’s exit from the market was also propelled by the fact that Aussies were seeking quality over convenience.

“What’s happened is with COVID, people have gone to quality,” he said.

“They’ll look for safe havens and put their money with Westpac, NAB, CBA, Citi. They don’t want to put it with Xinja or whoever, as in their view it’s too risky.

In a statement, Xinja said folding was “an incredibly hard decision”.

Sign up to the six-week financial bootcamp challenge!
Sign up to the six-week financial bootcamp challenge!

Find out more about The Broke Millennials Club’s 6-Week Bootcamp here. And join the conversation on Facebook.

Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter to make 2021 your best (financial) year yet.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting