Melbourne-based bank said to eye sale

ME Bank, a Melbourne-based online lender, is believed to be in informal talks about a possible sale.

The super fund-owned lender, estimated to be worth at least $1.1 billion, is reportedly mulling a sale to a private equity-backed consortium of investors, according to a report by The Australian.

The consortium reportedly has backing from a neobank-linked industry executive and is thought to be offering a price between $1.1 billion and $1.5 billion for ME Bank. The consortium is said to believe that the lender could be taken down the fintech business route, with low overheads, The Australian reported.

However, market watchers have expressed scepticism about a private equity bid, since industry regulators would prohibit a private equity group from owning more than 15% of a licensed bank.

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Major traditional banks have reportedly also made offers, most below ME’s book value. The reported bids come after the departure of former ME Bank head Jamie McPhee last year, following mounting speculation that a sale could be in the cards.

McPhee had run the bank for more than a decade. He left the lender after it became embroiled in a controversy over sudden changes to mortgage redraw facilities during the COVID-19 crisis, although McPhee said at the time that his departure was unrelated.

ME Bank is owned by 26 industry super funds. It was founded in 1994 to provide low-cost mortgages and loans to industry super members, according to The Australian. Although the bank is profitable, at least one superannuation fund is reportedly eager to sell it.

Some of the lender’s board members also reportedly support a sale, although the board is reportedly divided on whether to sell to another bank or private equity. However, market experts say that buying the lender at book value wouldn’t be an economically sound move for a competitor.