The National Australia Bank Ltd (ASX: NAB) share price is on watch today as the bank pushes further into the growing neobank sector.
Why is the NAB share price on watch today?
This morning, NAB announced it has entered into a scheme implementation agreement to acquire 100% of 86 400 Holdings Ltd shares. That is the holding company of Aussie neobank 86 400, of which NAB currently owns an 18.3% stake.
86 400’s growth has been impressive since being granted its authorised deposit-taking institution (ADI) licence in July 2019. As at 15 January this year, 86 400 had more than 85,000 customers and $375 million of deposits. The Aussie neobank has $270 million in approved residential mortgages and 2,500 accredited brokers.
The NAB share price is one to watch following the announcement, which signals the company’s strategic push towards expanding its presence in the neobank sector. The big four bank currently owns UBank, another leading neobank with more than 600,000 customers.
NAB announced UBank as a strategic priority in April 2020 as the company looks outside of its traditional banking products. NAB plans to accelerate UBank’s growth via this latest acquisition and potential synergies. That includes combining UBank’s customer base, brand and colleagues with 86 400’s experience and technology platform.
NAB expects total transaction costs of approximately $220 million with 86 400’s independent directors voting unanimously in favour of the scheme.
The 86 400 acquisition comes after fellow neobank Xinja handed back its banking license and returned money to its customers. Xinja was arguably a market leader but faced difficulties with bringing lending products to market while paying high rates to customers.
What about other ASX bank shares?
It’s not just the NAB share price that will be on watch today. Bendigo and Adelaide Bank Ltd (ASX: BEN) also has a large interest in the Aussie neobank market via its digital banking arm, Up.
Today’s announcement sees NAB pushing ahead with plans to take a stranglehold on the neobank market which means the Bendigo share price is worth keeping an eye on as well.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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