Effective 1 May, Challenger Bank will begin trading as Heartland Bank, and from 2 May, Heartland will transfer Heartland Australia Holdings and its subsidiaries, Heartland Finance and StockCo Australia, to Challenger Bank.
According to the group, completing the acquisition makes Heartland Bank the first New Zealand registered bank to acquire an Australian authorised deposit-taking institution (ADI).
“Completing the acquisition of Challenger Bank is a critical step in Heartland’s strategy for achieving its long-term growth ambitions and expansion in the Australian market, where we are already well-established,” commented Heartland CEO Jeff Greenslade.
The total consideration paid for the acquisition of Challenger Bank was $115.7 million and comprised the total purchase price of $46.4 million and an additional payment of $69.3 million, reflecting the increased capital being held by Challenger Bank.
Challenger Bank’s deposit raising programme, undertaken prior to completion, “positions Heartland well” for accelerated growth in Australia, according to the New-Zealand based group.
“Heartland has a unique opportunity to deliver specialist banking products to areas of the Australian market which we believe are underserviced by larger banks,” said Geoff Summerhayes, chair Heartland Bank in Australia.
“Heartland is already well-established in Australia as the leading provider of reverse mortgages (through Heartland Finance) and a leading provider of specialist livestock finance (through StockCo). Purchasing Challenger Bank provided Heartland with an opportunity to bring its existing Australian businesses together with an authorised deposit-taking institution to create Heartland Bank in Australia, a digital specialist bank.”
Challenger Bank, Heartland explained, will focus on providing Australians with specialist banking products through digital channels. Once Heartland Finance and StockCo become part of Heartland Bank (Australia), it will be Australia’s only specialist bank provider of both reverse mortgages and livestock finance.
“Being the first New Zealand bank to acquire an Australian ADI is a significant achievement for Heartland Bank, and with it comes an important responsibility,” said Leanne Lazarus, CEO Heartland Bank in New Zealand.
“The complexity of the transaction and our taking on of additional responsibility as the first New Zealand bank parent company of a trans-Tasman banking group demonstrates Heartland Bank’s continued strength, resilience and ambition to do things differently.”
Also on Tuesday, Heartland revealed that Geoff Summerhayes has resigned from the Heartland board and has been appointed chair and independent director of Heartland Bank (Australia).
Shane Buggle, Lyn McGrath, Vivienne Yu and Bruce Irvine have also been appointed independent, non-executive directors.
Meanwhile, Leanne Lazarus, current CEO of Heartland Bank and Greenslade will serve as non-independent, non-executive directors.
Heartland also confirmed the appointment of Michelle Winzer as CEO of Heartland Bank (Australia), effective from 22 July.
The announcement comes after Heartland confirmed earlier this month that it had received the necessary regulatory approvals from the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of New Zealand (RBNZ) to acquire the bank.
Challenger first announced it had signed a share sale agreement with Heartland Group to offload its banking arm for approximately $36 million back in October 2022.
At the time, it said that a strategic review had concluded that a sale was the best option for the bank.
It was also understood that the $36 million purchase price was around $11 million in excess of the bank’s net assets of approximately $25 million.
