BoQ has nose in front but ME Bank’s board is yet to make final decision

Working on the ME Bank sales process is investment bank Macquarie Capital and so far most have their money on Bank of Queensland to emerge as the buyer. Picture: NCA NewsWire / Dan Peled

Final bids are understood to have landed in the competition to buy ME Bank and sources say that whether a divestment does occur is still subject to deliberation by the board.

Working on the sales process is investment bank Macquarie Capital and so far most have their money on Bank of Queensland to emerge as the buyer.

It is understood final bids were received for the bank in the past two weeks and the board is now assessing its options.

The logic for BOQ to buy the business is to roll it into its Virgin Money operation to build scale.

BOQ bought Virgin Money in 2013 and it operates as a stand-alone business within the listed company.

Mergers and acquisitions were always thought to be on the cards for BOQ since the appointment of Patrick Allaway as chairman in 2019.

Allaway has an investment banking background, previously working at Citibank and Swiss Bank Corp (now UBS).

It has been rich pickings of late for parties hoping to buy banks in the Australian market, with AMP recently sounding out buyer interest for its banking operations.

AMP did not sell as it was unable to achieve the price it wanted. It is thought the competition came down to a regional bank and a major bank.

DataRoom understands that BOQ and Bendigo and Adelaide Bank both expressed interest in the AMP bank, while ANZ is also thought to have made a bid.

ANZ has also bid for ME Bank in a move that would offer it a competitive advantage in the mortgage market.

ME, with a $15.6bn mortgage book and $19.6bn in deposits, is owned by 26 industry super funds, including AustralianSuper, HESTA and Sunsuper and was founded in 1994, offering home loan discounts to members and competition to the major banks.

Earlier reports suggest Bendigo has also been looking at ME Bank along with a private equity consortium led by former Tyro CEO Gerd Schenkel.

Elsewhere, with respect to the replacement of Australia Post boss Christine Holgate, the talk in the market is that an internal candidate is favoured. Sources say acting chief executive Rodney Boys is best placed.