The desire to grow margin lending has fuelled Bendigo and Adelaide Bank's purchase of ANZ's $715 million share investment lending portfolio.
Bendigo and Adelaide Bank have pounced on ANZ's share investment lending portfolio home to approximately 11,900 customer facilities to grow its margin lending business Leveraged Equities Limited.
Bendigo and Adelaide Bank Managing Director and CEO Marnie Baker said the acquisition will strengthen Leveraged Equities' position as an industry leader in margin lending and enhance the scale of existing operations.
"The portfolio we are acquiring is well established and primarily comprises of retail customers which will complement Leveraged Equities' client base of professionals and clients under advice," Ms Baker said.
Speaking to Savings.com.au, Head of Leveraged Equities Lily Elliott said one of the key principles in the acquisition was that ANZ customers can expect to receive more, through a better product range than its predecessor.
"The portfolio of loans we are acquiring is very much weighted towards retail customers, complementing our current offerings," Ms Elliott told Savings.com.au.
"This expands our operation to be able to service more of the retail customer side of the market and drive advocacy for the bank and margin lending."
Data released by the RBA revealed marginal lending totaled $17 billion to the March 2022 quarter, with underlying securities valued at $81.5 billion across 93,000 customer accounts.
Read more: What is margin lending?
Share investing remains top priority for millennials
Faced with inflation, cost of living pressures and soaring house prices, Ms Elliott believes the younger generation is now actively considering how they will grow their wealth.
"Instead of starting off with a large mortgage and committing themselves to that, margin lending can ease the younger generation into investing," Ms Elliott said.
"In terms of building wealth, when you look at the overall equity markets you can liquidate your position by selling, coming in and out and utilising the margin loan as you wish as long as there is equity there. That's a big part of why margin lending is attractive."
Ms Elliott believes this flexibility works for the younger generation, given you are ultimately locked in for a number of years when you purchase a property and obtain a mortgage.
Research conducted late last year by CommBank revealed 43% of millennials claimed to be investing their money as opposed to spending.
CommBank Executive General Manager of CommSec Richard Burns said this was no surprise given the evidence of a behavioural shift from younger investors, with 63% of CommSec accounts belonging to millennials.
Trouble in the water or simply the 'winds of change'?
Bendigo and Adelaide Bank's purchase of ANZ's share investment lending portfolio to its subsidiary Leveraged Equities signals change is well and truly in the air at the big-four bank.
In a statement released Thursday, ANZ noted the divestment of its $715 million portfolio is consistent with ANZ’s simplification agenda.
"The financial impact is not material to ANZ," the ANZ statement noted.
Statistics published by Australian Prudential Regulation Authority (APRA) last year revealed ANZ has been struggling to grow its loan book as it battles with capacity to onboard new customers faster than they can refinance.
It also simplified its mortgage product lines earlier in the year, binning Breakfree packaged mortgages after the regulator fined the major bank under the 'fee for no service' charge.
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