Neck and neck: Macquarie (ASX:MQG) bumps Westpac to become third-largest Aussie bank

The investment bank has done what some once thought was unfathomable…

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The strong performance of Macquarie Group Ltd (ASX: MQG) has seen it solidify its position as one of Australia’s big four banks.

As of Wednesday’s close the investment bank is worth more than Westpac Banking Corp (ASX: WBC).

It comes just months after the S&P/ASX 200 Index (ASX: XJO) giant’s valuation shocked some market watchers by surpassing that of Australia and New Zealand Banking Group Ltd (ASX: ANZ), disrupting the once untouchable valuations of the banking heavyweights.

So, what’s boosted Macquarie into the big bank cult? Let’s take a look.

Macquarie outgrows another Aussie big four

Despite a slight tumble into the new year, the Macquarie share price has positioned the company as Australia’s third-largest bank.

It closed yesterday’s session at $208.39, leaving the bank with a market capitalisation of $79.94 billion, according to the ASX.

At the same time, that of Westpac was sitting at $79.49 billion while ANZ had a valuation of $78.92 billion.

Those paying attention to Macquarie’s recent performance will likely be unsurprised the investment bank has overtaken its smaller ASX 200 competitors.

Over the past 12 months, its share price has boomed a whopping 52%. For context, the ASX 200 has gained around 11.5% while the Westpac share price is up just 5%.

Perennial Value Management portfolio management director Stephen Bruce recently told The Motley Fool Australia’s Tony Yoo Macquarie’s success is born from, and will likely continue to lie with, its ability to adapt to new investment trends. Yoo quoted Bruce as saying:

[Macqaurie] were the leaders in infrastructure as pioneers of infrastructure-as-an-asset class. And now that’s obviously becoming a very crowded space, but they’ve proactively moved down the value chain into greenfield developments and actually creating the assets rather than just buying them.

Could the investment bank overtake more big fours?

Whether it can overtake the final 2 ASX big banks is probably the question now facing Macquarie fans. But the bank has a bit to go before we can call that a likelihood.

As of yesterday’s close, the market capitalisation of National Australia Bank Ltd (ASX: NAB) was head and shoulders above Westpac’s. It boasted a $95.41 billion valuation.

The Motley Fool Australia’s Zach Bristow recently crunched the numbers, finding the Macquarie share price would need to trade at around $249 before the bank could take out second position. That’s 19% higher than it currently sits.

For those wondering, it would be a massive ask for Macquarie to overtake Commonwealth Bank of Australia (ASX: CBA). CBA’s $173.33 billion market capitalisation makes it the largest company on the ASX 200.

At the time of writing, the Macquarie share price is up 0.56% at $209.56.

Should you invest $1,000 in Macquarie right now?

Before you consider Macquarie, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Macquarie wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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