National Australia Bank will become the new owner of neobank 86 400 after entering a deal to acquire 100 per cent of its shares.
Part of a new wave of digital-only banks, 86 400 was granted a licence to trade in July 2019.
By the middle of January this year, 86 400 had more than 85,000 customers, $375 million worth of deposits, $270 million in approved residential mortgages and 2,500 accredited brokers.
To combat the rise of digital-only neobanks, NAB announced in April 2020 that it would prioritise the digital offering by one of its subsidiaries known as UBank.
The new acquisition of 86 400 will help bolster the profile and offering of UBank.
"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.
"The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers."
NAB first began discussions with 86 400 in late 2020, acquiring a minority stake of 18.3 per cent to support its growth.
The bank expects the total cost of acquiring the remaining shares in 86 400 and other upfront transaction related expenses to be up to approximately $220 million.
CEO of 86 400 Robert Bell said the acquisition will benefit the neobank's existing customers.
READ MORE: NAB releases 0 per cent interest credit card
"Over the past 18 months, we've challenged the status quo of banking through innovative products, services and technology," Mr Bell said.
"86 400 and its customers will benefit from NAB's capital and balance sheet strength and investment spend to support accelerated growth and continued innovation, helping even more Australians take control of their money."
Another Australian neobank Xinja closed in December last year.
Source: 9News https://www.9news.com.au/national/nab-acquires-aussie-neobank-86-400-to-boost-ubank-performance/f746f5af-5d82-4673-8c76-edbe65200963