National Australia Bank weighs return to Scottish Pacific

It is understood National Australia Bank has been carrying out an ­assessment of the Scottish Pacific business. Picture: Getty Images

The $1bn-plus sale process for the non-bank lender Scottish Pacific is yet to start in earnest, but there’s one party that has already been at least kicking the tyres.

DataRoom understands that one of Australia’s top four lenders, National Australia Bank, has been carrying out an ­assessment of the business, weighing up whether to make an acquisition.

The understanding is that NAB has decided against the move for now, but what it does suggest is that the bank has­ ­mergers and acquisitions on the agenda.

NAB has also been connected to HSBC and a potential purchase of its retail banking operations in Australia, with suggestions that the UK-based group is staging a retreat from this market, after it purchased Citi’s Australia retail bank in 2022.

Goldman Sachs was hired by Affinity Equity Partners last year to sell its non-bank lending business, Scottish Pacific.

And while a sale process is yet to get officially under way, it’s already believed to have presented the opportunity to some buyers.

A few have kicked the tyres, say sources, while one group took a serious look before passing on the deal, thought to be the NAB.

Scottish Pacific, run by former Bank of Queensland boss Jon Sutton, was purchased by Affinity in 2018 for $630m and has more than doubled the group’s loan book in the last five years to $2.1bn, which suggests an asking price would be well beyond $1bn.

It has also tripled its customer base in that timeframe.

ScotPac has funded $23.9bn annually over 35 years, offering trade, asset, invoice finance and business loans.

It was floated in mid-2016 with a market value of $440m through Citi and Goldman Sachs.

But it is in a part of the lending market that big banks have exited from in the past.

Yet since banks have offloaded wealth management units, they need to find new areas for growth, with the level of home ownership falling, so they are open to various acquisition opportunities.

As well as selling its wealth business, National Australia Bank also retreated from Britain, where it owned Clydesdale Bank in Scotland.

Andrew Irvine was appointed NAB chief executive in April last year, and he could be moving forward with change.

Other banks that could consider Scottish Pacific are Judo Bank and Bendigo Bank, although some experts believe that the business is not of a large enough scale to move the needle for the locally listed, Victoria-based lender.