Bendigo and Adelaide Bank Acquires RACQ Bank’s Retail Lending Assets and Deposits
Bendigo and Adelaide Bank has announced its plans to acquire the retail lending assets and deposits of RACQ Bank, a subsidiary of the Royal Automobile Club of Queensland (RACQ), at book value. The strategic move comes at a time when RACQ Bank’s retail banking business has been witnessing a decline.
According to the terms of the agreement, Bendigo and RACQ will enter into a referral arrangement for RACQ’s 1.7 million members. RACQ Bank, with around 90,000 customers, represents only 5% of the membership of the broader RACQ Group. This suggests that the cross-selling of banking products to the wider membership has been a challenge. However, with the acquisition, Bendigo aims to boost its prospects courtesy of its Up brand.
Historical Overview of RACQ Bank
RACQ Bank, initially known as QT Mutual Bank, was founded as Queensland Teachers Credit Union in 1966. RACQ took control of QTMB in late 2016. David Carter, the RACQ Group CEO, acknowledged that even though RACQ Bank has achieved quality growth since its inception in 2016, the need for substantial ongoing investment to meet the growing demand for digital banking, to stay competitive, and to meet regulatory requirements necessitated the acquisition.
Bendigo Bank’s Perspective
Richard Fennell, the Bendigo CEO, revealed that the conversation for acquisition started at the RACQ end. He clarified that Bendigo Bank is not actively seeking acquisitions, but is instead concentrating on organic growth. “Our primary focus is on organic growth,” said Fennell.
RACQ Bank’s Assets and Liabilities
RACQ Bank has a strong deposit franchise with retail deposits making up 92% of the lending portfolio, and a high proportion of lower-cost deposits. The transfer of assets will increase Bendigo Bank’s Queensland exposure from 15% to 18% of its residential lending portfolio. APRA data shows RACQ Bank held $2.4 billion in household deposits and $2.6 billion in mortgages as of October 2025. The transfer is expected to be completed during the latter half of 2026.
Financial Implications
The impending acquisition, to be funded from cash reserves, is expected to consume approximately 35 basis points of CET1 capital. The move to a single core banking system by the end of 2025 will enable efficient integration, reducing incremental costs and leveraging existing migration and integration capabilities. Bendigo anticipates that the acquisition will generate net interest income in the range of $50 million to $55 million, based on the transferring book as of June 2025, alongside estimated incremental costs to service the transferring book of $12 million to $14 million before tax.
Impact on RACQ Bank Staff and Customers
As part of the deal, Bendigo will offer employment to only some of RACQ Bank’s lending staff. RACQ Bank customers will be migrated to Bendigo products at the completion of the transfer. Post-transfer, RACQ Group will be left with approximately $1 billion in assets. The remaining assets of RACQ Bank are likely to be wound up or sold off, and the ADI licence surrendered.
This strategic move by Bendigo Bank is a testament to its commitment to serving its customers better and its drive for organic growth. The acquisition is a significant development for both Bendigo and Adelaide Bank and RACQ Bank, and the potential benefits for customers and employees alike will be keenly watched.
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