Queensland now Home

The Bank of Queensland Ltd’s plan to acquire Perth’s Home Building Society Ltd has rival financial institutions looking for opportunities to take advantage of the takeover.

Home had been positioning itself as the only major Western Australian financial institution left following HBOS plc’s takeover of BankWest.

With its head office to be in Brisbane, the combined group will find it harder to play the parochial card in its marketing.

Perth’s biggest homegrown and locally run financial institution will be Police & Nurses Credit Society, which last week reported a solid rise in lending and profits.

P&N has stayed independent while many of its competitors have fallen into the arms of big banking groups, which dominate the local market.

BankWest is part of the HBOS group, Challenge Bank (formerly Perth Building Society) is now part of Westpac Bank, and Town & Country Building Society has been absorbed by ANZ Bank.

Offsetting these changes has been the entry of new players to the market.

Interstate and overseas banks such as St George Bank, Bendigo Bank and its Community Bank operations Elders Rural Bank and Rabobank, have built a substantial presence in the WA market.

St George is opening five branches in WA, more than 30 Community banks have been established across the state, while Rabobank and Elders Rural are competing in the rural market.

In the housing loans market, mortgage originators such as Wizard, Aussie and RAMS have provided new competition for the traditional lenders like banks, building societies and credit unions.

Mortgage brokers including Mortgage Choice and The Loans Café have also had a big impact on the housing loans market by allowing borrowers to choose from a wide array of lenders, including some with no physical presence in WA.

This highly competitive landscape provides the backdrop to BOQ’s deal with Home.

BOQ had tried earlier this year to merge with Bendigo Bank, but Bendigo rejected that option in favour of a merger with Adelaide Bank.

Therefore, BOQ turned instead to Home, whose directors have recommended that shareholders accept the $592 million takeover proposal.

Under the proposed scheme, the Home and BOQ brands will be maintained in WA for up to 18 months while the new entity evaluates a possible new brand. Home chairman Tony Howarth said the deal would create a regional banking powerhouse anchored in the two fastest growing states in Australia – WA and Queensland.

“This brings together two organisations that have a very strong regional banking culture and a great service opportunity to our customers,” Mr Howarth said.

BOQ already has a presence in WA through its owner managed branch (OMB) franchise model, which allows local bankers to own and operate bank branches.

“We already have four, soon to be six, OMBs in Western Australia and our first, Subiaco, is the fastest-growing branch in our national network,” BOQ managing director David Liddy said.

BOQ also has a business banking presence in WA, with a particular focus on equipment and debtor finance.

In addition, it provides banking products for members of health insurance provider HBF.

Home has 29 branches in WA and intends to open several more.