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ACCC clears the way for NAB’s 86 400 acquisition

by Annie Kane12 minute read
ACCC clears the way for NAB’s 86 400 acquisition

The competition watchdog has said that it will not oppose the proposed acquisition of neobank 86 400 by National Australia Bank Ltd.

In January of this year, major bank National Australia Bank Ltd (NAB) announced that it would increase its 18 per cent shareholding in 86 400 Holdings Ltd (86 400) to 100 per cent for a total consideration of around $220 million.

The transaction, which was subject to approval by shareholders and regulators, is now a step closer to completion by “mid-calendar year 2021” after the Australian Competition and Consumer Commission (ACCC) said it would not oppose the deal.

Speaking of the decision, ACCC chair Rod Sims said: “Innovative fintechs play an increasingly critical role in the market, challenging the established banks, leading to more innovative and cheaper banking for consumers. We therefore examined the proposed acquisition particularly closely, including extensive consultation with industry participants, given the important role of that innovation.” 


The ACCC’s consultation reportedly included banks, non-bank lenders, fintechs, mortgage brokers, industry and consumer bodies, among other stakeholders.

The watchdog said that “most interested parties” had either “no, or limited, concerns” with the transaction.

“Market feedback suggested that while 86 400 is innovative, particularly in reducing the time and effort in completing home loan applications, there are a number of other businesses with similar offerings or the ability to replicate them. These other competitors continue to bring a similar disruptive influence to the market,” Mr Sims said.

“Supporting our decision is that we have seen several banks and non-bank lenders outside the big four invest heavily in their technology and service offering to improve user experience.”

“While in this instance we found that the removal of 86 400 is unlikely to substantially lessen competition in the market, we will continue to closely scrutinise proposed acquisitions of emerging competitors, particularly by major banks,” Mr Sims said.

The chair added that the ACCC’s Home Loan Price Inquiry reports of 2018 and 2020 showed that competition between the big four banks had been “muted at best”.

“They tend to accommodate each other rather than competing strongly to win market share. Therefore, any acquisition of a rival or potential rival by any of the big four needs to be very closely considered,” he said.

Under the transaction, all 120 people in the 86 400 team are expected to become part of the NAB group as it integrates with its digital bank, UBank.

Noting the decision, NAB and UBank welcomed the move.

UBank CEO Philippa Watson said the proposed acquisition would allow the combined business to deliver “a market-leading digital experience” and new product propositions that would benefit Australian customers and meet their changing needs.

“For UBank, the proposed acquisition is part of our commitment to delivering exceptional banking services and experiences to our customers,” Ms Watson said.

“We are pleased with the ACCC’s decision and look forward to our continued engagement with regulators as we progress towards completion of the transaction.”

86 400 and UBank will continue to operate as separate businesses until the transaction is finalised.

The digital bank, which is majority owned by payments provider Cuscal Ltd, has offered online transaction and savings accounts since September 2019, and launched a home loan product sold through a network of selected brokers in November 2019. 

Speaking to The Adviser last month, the CEO of 86 400, Robert Bell, confirmed that brokers would continue to be “a big focus” for the neobank, including when it subsumes under the UBank brand.

APRA determination expected in coming weeks

Completion of the transaction still remains subject to certain conditions, including further regulatory approvals from APRA and approval of the scheme by the Federal Court, but the ACCC decision has helped clear the way for it to move forward.

The deputy chair of APRA, John Lonsdale, was asked about the merger by the House of Representatives standing committee on economics on Monday (29 March), and revealed that he expected an assessment would be forthcoming in the next few weeks.

The committee chair Tim Wilson asked whether major bank acquisitions of neobanks required further assessment in terms of impacts on competition.

Mr Lonsdale responded: “That’s something we look at very closely. There is an active case that you know of, the 86 400 case. That particular matter APRA will make a determination under the FSSA Act [Financial Sector (Shareholdings) Act 1998] and the key requirement [under that] is that there’s a public interest in any acquisition. So, we’re consulting with the interested parties, and the ACCC is a key party that we are talking to and in fact has done a public review of that particular issue. 

“Once that is complete, we will take a look at the competition impacts and we will also look at any prudential impacts as well as other things and make an assessment on the matter.”

Mr Lonsdale said yesterday that APRA was awaiting the ACCC’s assessment and that, once it was arrived at, APRA would “move as expeditiously as [it] can” to complete the assessment.

“We don’t have a particular time frame, but these are commercial transactions, and we want that dealt with as soon as we can. We’re talking weeks,” he revealed.

[Related: Major bank to acquire 86 400]

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