NAB is set to acquire neobank 86 400 and combine it with its own digital-only proposition UBank.
The big four bank already holds approximately 18.3 percent of 86 400 after participating in a recent capital raising round.
It is now proposing to buy out the remaining shares for a cost of approximately $220 million, “a premium” on the recent raise.
86 400 said it has over 85,000 customers and 320,000 accounts, as well as a digital mortgage brokerage business.
The neobank’s CEO Robert Bell said in a statement that joining UBank “will significantly fast-track our growth, propelling our business, customer numbers and balance sheet to a position which would’ve otherwise taken five years.”
UBank CEO Philippa Watson said that 86 400’s "experience and technology platform" would help UBank meet changing customer needs.
"We are looking forward to having the 86 400 team join us to help deliver the next generation of simple, fast and mobile banking solutions," she said.
86 400's decision to sell to NAB comes a bit more than a month after another large neobank, Xinja, handed back its banking licence.
NAB said discussions with 86 400 began in late 2020, and ultimately saw the neobank's independent directors vote in favour of the scheme.
According to NAB chief operating officer Les Matheson, the acquisition will fast-track UBank’s growth and falls in line with the bank’s long term strategy plans to develop a leading digital bank.
“The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers,” he said.
Completion of the transaction is subject to certain conditions, including regulatory approvals from the Treasurer, the Australian Prudential Regulation Authority (APRA) and the Australian Competition and Consumer Commission (ACCC).
The Federal Court is also required to approve the scheme. This is expected to be completed by mid-2021 pending approvals.
86 400 and UBank will continue to operate as separate businesses until the transaction is finalised.