National Australia Bank is to acquire 86 400, one of a crop of new digital banks which have struggled to break the dominance of Australia's Top Four banks.
Founded by Cuscal Ltd and led by CEO Robert Bell, 86 400 has more than 85,000 customers, $375 million of deposits, $270 million in approved residential mortgages and 2,500 accredited brokers.
NAB intends to combine the business with its direct banking unit UBank, which currently serves more than 60,000 customers.
“Bringing together UBank and 86 400 is consistent with NAB’s long-term strategy and growth plans and will enable us to develop a leading digital bank that can attract and retain customers at scale and pace,” NAB chief operating officer, Les Matheson says. “The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers.”
NAB subscribed for a minority stake in in the challenger's latest Series B $32 million capital raising and currently holds an approximate shareholding of 18.3%. The total cost of acquiring the remaining shares will run to approximately $220 million. The price is at a premium to the Series B capital raise
Tha app-only bank had raised over $120 million in its bid to disturb the dominace of Australian incumbents. But like now defunct rival startup Xinja, the challenge of raising yet more capital to fund growth has become an increasing burden.
86 400 CEO Robert Bell says: “86 400 and its customers will benefit from NAB’s capital and balance sheet strength and investment spend to support accelerated growth and continued innovation.”