Challenger are selling Challenger Bank to Heartland for basically net assets, offloading it like it is nothing but an ADI licence .. which it is.

It’s a good deal and Heartland is a well credentialed buyer. It runs a bank in New Zealand and wants to run a fully-fledged bank in Australia.

Well not that fully-fledged: Heartland’s assets are reverse mortgages and a bit of agri.

The consideration payable by Heartland on completion is expected to be approximately A$36 million, subject to adjustments for net assets delivered at completion. 

“Heartland’s intention is to cover the costs of the acquisition through existing resources,” the company said.

 “Heartland’s strategic objective for expansion in Australia requires the establishment or acquisition of an ADI. Becoming a bank through an ADI in Australia would make possible a number of benefits:

Access to a deep and efficient pool of funding to support ongoing growth; Potential uplift in margin, to the extent that retail funding rates are less than wholesale rates; and

Providing a platform to extend Heartland’s strategy into Australia.