Is Bank of Queensland gearing up for the next big ASX 200 bank merger?

Is history repeating between Bank of Queensland and Bendigo Bank?

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Key points
  • Rumours Bank of Queensland and Bendigo Bank are in merger discussions have emerged this week
  • If fruitful, it could mark the second major ASX 200 bank merger proposed within the last 12 months
  • Though, the Bank of Queensland has denied it's in any such talks 

Merger and acquisition activity amid S&P/ASX 200 Index (ASX: XJO) bank shares have been hot lately, with ANZ Group Holdings Ltd (ASX: ANZ)'s plan to buy Suncorp Group Ltd (ASX: SUN)'s banking division piquing attention in July.

And now another unification could be in the works. Bank of Queensland Ltd (ASX: BOQ) and Bendigo and Adelaide Bank Ltd (ASX: BEN) are reportedly rumoured to be in early merger discussions.

The not-quite-big-four-banks boast respective market capitalisations of approximately $4.6 billion and $5.7 billion.

Right now, the Bank of Queensland share price is $7.05 while that of Bendigo Bank is $10.02.

Let's take a closer look at the talks rumoured to be happening between the two ASX 200 bank shares.

Businesswoman holds hand out to shake.

Image source: Getty Images

Is Bank of Queensland in ASX 200 merger talks?

Bank of Queensland and Bendigo Bank are contemplating a more-than-$10 billion merger, sources have reportedly told The Australian. However, Bank of Queensland is said to have denied such suggestions.

It follows the surprise ousting of former Bank of Queensland CEO George Frazis in November. Commenting on Frazis' departure, chair Patrick Allaway said:

[D]ifferent leadership is now required to ensure BOQ can continue to build a stronger and more resilient bank through future cycles.

It has reportedly been suggested that the bank has stalled its search for a new leader as it considers a possible merger, which could bring both competitive and regulatory benefits.

Though, the bank told the publication its search for a new CEO is ongoing and no talks between it and Bendigo Bank are in progress.

The rumours come just two years after Bank of Queensland acquired ME Bank for around $1.3 billion – representing an implied acquisition multiple of 1.05 times book value and 11.9 times cash underlying earnings.

Then, Allaway dubbed the buy, "a key step in our strategy to be a compelling alternative to the big banks."

If a Bank of Queensland/Bendigo Bank merger proposal sounds familiar, it's probably because it is.

The former bank put forward a $17.18 per share takeover bid for the latter in 2007. That bid was ultimately rejected. Bendigo Bank instead merged with Adelaide Bank later that year.

So, might the market see another merger proposal from the ASX 200 bank shares in the coming months or years? Only time will tell.

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 positions in and has recommended Bendigo And Adelaide Bank. 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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