Incoming Heartland Bank Australia CEO Michelle Winzer
New Zealand financial services company Heartland Group plans to use the deposit funding available to it through its acquisition of Challenger Bank to expand its reverse mortgage and livestock finance businesses in Australia and move into new areas such as auto and asset finance.
Heartland announced yesterday that it has received conditional approval from the Australian Prudential Regulation Authority and the Reserve Bank of New Zealand for Heartland Bank (NZ) to acquire Challenger Bank.
Approval is conditional on Heartland raising equity to finance part of the consideration, support regulatory capital requirements and fund asset growth after the transaction is completed.
The capital raising, which was launched yesterday, is made up of a NZ$105 million underwritten placement and a NZ$105 million underwritten 1 for 6.85 accelerated non-renounceable entitlement offer.
Once the deal is done, Heartland will transfer Heartland Australia Holdings and its subsidiaries, reverse mortgage lender Heartland Finance and livestock finance business StockCo Australia, to Challenger Bank. The bank will be rebranded Heartland Bank Australia.
Michelle Winzer has been appointed CEO of Heartland Bank Australia. She is moving from RACQ Bank, where she was chief executive. Winzer has also been CEO of Bank of Melbourne and has had senior roles at Bankwest and Commonwealth Bank.
Before she takes up the role later this year, Chris Flood, deputy CEO of Heartland Group, will be acting CEO of Heartland Bank Australia.
The acquisition will make Heartland Bank the first New Zealand registered bank to acquire an Australian ADI.
The group plans to continue what it calls its “best and only” strategy in Australia, operating in specialist financial markets. It is one of only a handful to reverse mortgage lenders here and claims to be the only specialist livestock finance provider.
The group said in a statement yesterday that it will accelerate growth in Australia by “leveraging” Challenger Bank’s retail deposit funding platform and combine that with its New Zealand experience in distribution.
Areas of expertise in New Zealand that it will look to develop here include motor and asset finance.
It said Challenger Bank deposit growth in 2023 was achieved at a lower cost of funds that Heartland Australia’s current cost of funds.
Its current funding is through securitisation and medium term note programs. It said it expects the majority of funding to come from retail deposits within 12 months from completion of the acquisition.
Heartland Australia has a NZ$1.7 billion reverse mortgage book and a $296 million livestock finance portfolio.
The group has forecast that Heartland Bank Australia will have total assets of A$3.04 billion by the end of the 2024/25 financial year and will report net profit of around $36 million.
Heartland also provided a board and management update yesterday, announcing that chief executive Jeff Greenslade will step down at the end of the year. Greenslade has been at Heartland Group for 15 years, from its formation in 2011.
Geoff Summerhayes will resign from the Heartland Group board and take up the chair at Heartland Bank Australia.