Heartland chief executive Jeff Greenslade says the latest move is a logical step forward from its existing reverse mortgage business. Photo: Supplied
The online financial services company Heartland Group is making another move across the Tasman - signing an agreement to buy Melbourne-based Challenger Bank for about $A36 million ($NZ39.8m).
It comes after Heartland's recent purchase of Australian rural finance company StockCo.
Heartland chief executive Jeff Greenslade said the move allowed it to become a bank, and it was a natural step forward from its existing reverse mortgage business and the acquisition of StockCo in Australia.
Reverse mortgages allow older home owners to cash in on their property's value.
Subject to completion, Heartland said its reverse mortgage and livestock businesses would be transferred to sit in or under Challenger Bank.
"The opportunity to grow these existing businesses in Australia either as part of a bank or a broader banking group is significant," Heartland told the sharemarket.
Heartland said with Challenger, it aimed to create a digital bank which would be profitable.
The move also comes after Heartland announced in August that it had entered into a non-binding memorandum of understanding with Avenue Hold Limited for the potential acquisition of Avenue Hold and Avenue Bank in Australia.
But since then, Heartland said market conditions had changed and it became aware of Challenger Bank as an alternative opportunity.
Heartland said its board assessed that Challenger Bank would be a stronger opportunity as it offered a full authorised deposit-taking institution (ADI), as opposed to Avenue, which was a restricted ADI.
Heartland also provided a trading update, saying it saw growth across its lending portfolios of reverse mortgages as well as motor and asset finance for the first quarter of its 2023 financial year.