ME Bank up for grabs book values on the Australian LACHLAN MOFFET GRAY Securities Exchange. 18 January 2021 The approaches follow the departure of outgoing boss Jamie E Bank is believed to be McPhee last year, after speculation in informal talks with a started mounting that a sale of the M private-equity backed lender could be on the agenda, with consortium of investors about a some shareholders eager to embark potential sale of the industry super on an exit. fund-owned lender that is estimat- Mr McPhee had run the bank ed to be worth at least $1.1bn. for more than 10 years and his exit It is understood that the came after the bank was entangled consortium involved has backing in controversy over abrupt changes opinion is divided as to whether from an industry executive linked to mortgage redraw facilities during the buyer should be another bank to a neobank and is thought to be the COVID-19 crisis, although he or private equity. offering a price around its book said at the time his departure was The challenge for Australian value, estimated to be between not related to the controversy. listed banks when it comes to $1.1bn and $1.5bn. It is understood that Mr McPhee buying ME is that with most trad- Sources say that the consor- is not involved in the latest consor- ing at below their net asset value tium believes ME Bank could tium approach. themselves, a deal remains uneco- be taken down the financial ME Bank is owned by 26 nomical unless they can secure it at technology business route, with industry super funds, including a major discount. low overheads. AustralianSuper and Hesta, and was Market analysts say that buying This would be without suffer- founded in 1994 with the intent of the Melbourne-based ME Bank at ing from the funding constraints providing low-cost mortgages and book value would not make eco- that have plagued some junior loans to industry super members. nomic sense for a competitor. banks and contributed to the de- It has faced strong competition The bank, now run by its for- mise of Australian fin-tech Xinja from larger banks, as it wrestles with mer chief financial officer Adam late last year. funding constraints and a high-cost Crane, is understood to have However, market experts are broker distribution model. grown its customer numbers from sceptical about a private equity Although the bank is profitable, 234,000 to 542,000 and its assets bid, given that industry regulators with its last reported annual net by 50 per cent to $30bn. would not allow such a group to profit at $80.8m, the understanding Market experts add that any own more than 15 per cent of a is that at least one superannuation acquisition from a neobank would licensed bank. fund is eager for a sale. likely involve an offshore operator, Major traditional banks have The bank has not paid a divi- given that most in Australia would also put forward offers below dend to its owners. not be large enough to fund a trans- ME’s book value, say sources, with It is understood that at least action, unless the party secured most listed industry participants some of ME Bank’s board mem- support from ME’s existing super currently trading below their bers support a sale, although fund investors.