Judo Bank bulks up for challenge to big four

Judo co-founders Joseph Healy and David Hornery. Picture: Britta Campion

The book is all but closed on Judo Bank’s blockbuster capital raising, with $345 million in firm commitments and an unnamed institution granted an extension of a few weeks to complete due diligence on a significant investment.

Judo co-founder Joseph Healy expects total proceeds to exceed $400m by the end of this week.

By the close of the June financial year, the challenger bank will have raised $550m in equity over the last 12 months — testimony to the market’s firm belief that the big four’s stranglehold on commercial lending in this country is ripe for disruption.

Judo’s main objective now is to scale the business on the east coast ahead of an incursion into Adelaide and Perth in 2020.

The business lender, which acquired a full banking licence from the Australian Prudential Regulation Authority in April, currently has 117 staff — 20 in Sydney, 10 in Brisbane and the rest in Melbourne.

According to Healy, the loan book stands at $250m-plus with a “strong” pipeline.

While Judo has no problem attracting interest from experienced big-four business bankers, the founder says it’s “surprising and disappointing” that well over half of applicants who want to work for Judo have failed to clear the most challenging hurdle — a three-hour, internally-developed credit examination.

The closed-door exam comes in two parts.

The first is an exercise in financial ratio analysis, while the second is a case study where the applicant has to identify key credit risks, how to mitigate them and how to best structure a transaction.

The average pass rate for the exam is 40 per cent, ranging from as low as 38 per cent to a high of 45 per cent.

It’s an indictment of the industry that too many bankers don’t have the required credit skills.

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