Bendigo Bank shares rise after going long on leverage with ANZ lending acquisition

Bendigo and Adelaide Bank has struck a deal with ANZ…

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Key points

  • Bendigo and Adelaide Bank is strengthening its Leveraged Equities business with an acquisition
  • It has signed a deal to buy the investment lending portfolio of banking giant ANZ
  • Management expects the deal to be earnings accretive once complete

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is pushing higher on Thursday morning.

At the time of writing, the regional bank’s shares are up 1% to $9.38.

This makes the Bendigo and Adelaide Bank share price the strongest performer among the major banks.

Why is the Bendigo and Adelaide Bank share price rising?

Investors have been bidding the Bendigo and Adelaide Bank share price higher in response to the release of an announcement.

According to the release, the company has agreed to acquire the investment lending portfolio of Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Management believes the acquisition will allow Bendigo and Adelaide Bank to further grow its Leveraged Equities margin lending business. It is already one of the leading and longest established margin lenders in Australia.

The ANZ investment lending portfolio has a value of approximately $715 million, with approximately 11,900 customer facilities. As a result, this acquisition is expected to take the combined value of Bendigo and Adelaide Bank’s margin lending portfolio to more than $2 billion at completion.

Bendigo and Adelaide Bank will pay an “immaterial premium over book value” for the investment lending portfolio, which will be funded through the ordinary course of business operations.

Pleasingly, the acquisition of this high return portfolio is aligned with the bank’s objective of growing its return-on-equity and will be earnings accretive upon completion

The deal is expected to complete in the first half of calendar year 2023.

‘A strong future’

Bendigo and Adelaide Bank’s managing director and CEO, Marnie Baker, spoke positively about the acquisition. She said:

In line with our vision to be Australia’s leading bank of choice, the acquisition will strengthen Leveraged Equities’ position as an industry leader in margin lending and enhance the scale of our existing operations.

The portfolio we are acquiring is well established and primarily comprises retail customers which will complement Leveraged Equities’ client base of professionals and clients under advice. We believe there is a strong future for Margin Lending in Australia, and this acquisition will create further opportunities for growth.

Motley Fool contributor James Mickleboro 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 positions in and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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