CUA sells health insurance business to HBF
CUA has offloaded its health insurance business as it chases growth in the ultra-competitive mortgage market, hunts for bolt-on acquisitions.
Australia’s largest customer-owned lender, CUA, has offloaded its health insurance division to HBF as it chases growth in its core banking business, with the cashed-up bank now on the hunt for bolt-on acquisitions.
The sale of CUA Health, for an undisclosed sum believed to be around the $200m mark, comes days before the Brisbane-based credit union ditches its decades-old name and rebrands to Great Southern Bank in a bid to appeal to younger Australians.
As part of the deal, CUA will offer HBF health insurance to its banking customers for at least the next five years.
“Our two companies have long and proud histories and share similar values, with both organisations committed to a customer-focused business model delivering strong value for customers,” CUA chief executive officer Paul Lewis said.
“This move allows both of us to focus on our core business and key strengths. For CUA, we can focus on our core banking business and helping customers with all aspects of their home ownership journeys, whether it’s saving for a first home, buying a portfolio of houses, or being financially secure enough to help the kids buy their first property.”
CUA is looking to spend the proceeds from the sale on building up its capability and capacity in the home lending market, Mr Lewis said.
It could be acquiring some adjacent businesses that provide different services to our customers around banking that we don’t offer today … and potentially, if the opportunity presents, raising a mutual capital instrument to acquire something a little larger related to our core business of mortgages and deposits.”
HBF CEO John Van Der Wielen said the similar ethos of the two firms and the lack of overlap in their geographic footprints made the deal a great fit.
“Acquiring CUA Health is a significant and compelling strategic move for HBF to further propel our national growth strategy,” he said.
The sale is expected to complete in the first quarter of fiscal 2022, with CUA using the funds to grow its banking operations.
Amid tough competition for mortgages in recent months, CUA in March reported its loans under management had fallen 1.5 per cent to $13.4bn in the first half.
The bank has been courting first-home buyers, whose home loans typically tend to have higher loan-to-value ratios, but who are loyal customers, Mr Lewis said.
“The money raised from this sale will increase our ability to achieve this (growth) and give us the opportunity to pursue growth options for our core banking business.
“This is just the next step in what is going to be a huge year for CUA as it transitions to Great Southern Bank,” he said.
CUA announced its name change earlier this year after it found that more than half of Australians didn’t know what a credit union did – with that number jumping to 70 per cent among Millennials.
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