Bendigo Bank shares rise after long benefiting from leverage with acquisition of ANZ loans

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The Bendigo and Adelaide Bank Ltd (ASX:BEN) the stock price rises on Thursday morning.

As of this writing, shares of the regional bank are up 1% at $9.38.

This makes Bendigo and Adelaide Bank share price the best performer among the major banks.

Why is the Bendigo and Adelaide Bank stock price rising?

Investors pushed up the prices of Bendigo and Adelaide Bank shares in response to the release of an announcement.

According to the release, the company has agreed to acquire the investment loan portfolio of Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Management believes the acquisition will allow Bendigo and Adelaide Bank to further develop its leveraged equity margin lending business. It is already one of Australia’s largest and oldest margin lenders.

ANZ’s investment loan portfolio is worth approximately $715 million, with approximately 11,900 customer installations. As a result, this acquisition is expected to bring the combined value of Bendigo and Adelaide Bank’s margin loan portfolio to over $2 billion upon completion.

Bendigo and Adelaide Bank will pay an “immaterial premium to book value” for the investment loan portfolio, which will be funded in the normal course of business.

Fortunately, the acquisition of this high-yield portfolio is aligned with the bank’s goal of increasing its return on equity and will be earnings accretive when completed.

The deal is expected to close in the first half of calendar year 2023.

“A Strong Future”

Bendigo and Adelaide Bank Managing Director and CEO Marnie Baker spoke positively about the acquisition. She says:

In line with our vision to be Australia’s premier bank of choice, the acquisition will strengthen Leveraged Equities’ position as a leader in the margin lending industry and enhance the scale of our existing operations.

The portfolio we are acquiring is well established and primarily includes retail clients who will complement the professional and advised client base of Leveraged Equities. We believe there is a strong future for Margin Lending in Australia, and this acquisition will create new growth opportunities.