The first New Zealand bank to buy an Australian bank

Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) today announced Heartland Bank Limited’s (Heartland Bank’s) acquisition of Challenger Bank Limited (Challenger Bank) is now complete.

This makes Heartland Bank the first New Zealand registered bank to acquire an Australian authorised deposit-taking institution (ADI).

Heartland Bank New Zealand CEO, Leanne Lazarus said, “being the first New Zealand bank to acquire an Australian ADI is a significant achievement for Heartland Bank, taking on additional responsibility as the first New Zealand bank parent company of a trans-Tasman banking group demonstrates Heartland Bank’s continued strength, resilience and ambition to do things differently.

“Heartland Bank in New Zealand remains focused on driving growth in our specialist areas of expertise and providing New Zealanders with banking products which are the best or only of their kind, through digitalisation and automation – removing friction for customers and delivering enhanced customer experiences.”

Jeff Greenslade, CEO of listed parent company, Heartland, said, “completing the acquisition of Challenger Bank is a critical step in Heartland’s strategy for achieving its long-term growth ambitions and expansion in the Australian market, where we are already well-established”.

In Australia, Heartland already operates Heartland Finance and StockCo Australia. Reverse Mortgage business, Heartland Finance, is Australia’s leading provider of reverse mortgages with 42% market share.[1] Since 2004, Heartland Finance has helped more than 27,500 Australians to live a more comfortable retirement by releasing equity from their homes. Livestock Finance business, StockCo Australia, is a leading specialist provider of livestock finance. StockCo Australia has been providing livestock finance solutions to food producers across Australia since 2014, with origins in New Zealand dating back to 1995. At 31 December 2023, Heartland Finance and StockCo Australia together had approximately NZ$2 billion of gross finance receivables.

Introducing Heartland Bank in Australia

From today, Challenger Bank will begin trading as Heartland Bank in Australia – a digital specialist bank.

Drawing on Heartland’s product and distribution expertise in New Zealand, and the Heartland group’s successful track-record in Australia, Heartland Bank in Australia will focus on providing Australians with specialist banking products that are the best or only of their kind, through digital channels. Once Heartland Finance and StockCo are transferred to Heartland Bank in Australia, which is expected to take place on 2 May 2024, it will be Australia’s only specialist bank provider of both reverse mortgages and livestock finance.

Expansion in Australia will be enabled through access to retail deposits, providing the advantage of a lower cost of funds. As such, Heartland Bank in Australia will continue to actively raise deposits – its 6-, 9- and 12-month Term Deposit offers are currently market leading. [2]

Heartland has also confirmed the appointment of Michelle Winzer as Chief Executive Officer of Heartland Bank in Australia, effective from 22 July 2024.

Chris Flood has been appointed Acting Chief Executive Officer of Heartland Bank in Australia, effective 1 May 2024. Chris is expected to return to his role as Deputy Chief Executive Officer of listed parent company, Heartland, later in the 2024 calendar year, allowing time for a comprehensive handover with Michelle.

Michelle and Chris will be supported by a management team in Australia with extensive experience in banking and financial services. For more information, go to heartlandgroup.info/about-heartland/management.

For more information, including the full announcement by Heartland, please visit the Heartland Group website.

[1] Based on Australian Prudential Regulation Authority (APRA) ADI Property Exposure and Heartland Finance data as at 31 December 2023. This does not include data from non-ADI providers of reverse mortgages.

[2] Challenger Bank’s 6-, 9- and 12-month Term Deposit rates are higher than other rates advertised for an initial deposit amount of AU$25,000 as at 30 April 2024.