ME Bank hands back banking licence

Members Equity Bank Limited (ME Bank) has had its authorised deposit-taking institution (ADI) licence officially revoked by the Australian Prudential Regulation Authority (APRA) and will operate under Bank of Queensland Limited’s (BOQ) licence moving forward.

The move comes after ME Bank requested the revocation following the completion of BOQ’s acquisition of the bank in July 2021.

It will continue to operate as its own brand under the BOQ Group (which also includes BOQ and Virgin Money).

Noting the revocation of the licence, BOQ issued the following statement: “[BOQ] is pleased to note that, effective from today [1 March], it has completed a voluntary transfer of all the assets and liabilities of Members Equity Bank Limited (MEBL) to BOQ in accordance with the Financial Sector (Transfer and Restructure) Act 1999 (Cth). 

“Accordingly, MEBL’s authorised deposit-taking institution (ADI) licence has been handed back to APRA today.

“ME Bank will continue to be an important brand within BOQ’s multi-brand strategy and will operate under BOQ’s ADI licence going forward. 

“There will be no change to the products and services offered under the ME Bank brand as a result of the transfer or the ADI licence hand back.”

The acquisition of ME Bank by BOQ boosted the group’s pro forma total assets to over $88 billion, with total deposits of more than $56 billion. 

It also equalised the split between retail and commercial business, given that 60 per cent of BOQ’s own book was for business lending.

However, ME Bank has been experiencing a squeeze on its loan book recently, after its results for FY21 showed that the bank’s total loan book fell by 6 per cent in the 12 months to 30 June 2021, down to $25.6 billion.

Moreover, it is currently facing criminal charges relating to allegations of “false and misleading representations”, including those issued to home loan customers between September 2016 and September 2018.

ASIC has claimed the letters made false and misleading representations about:

• Customers’ relevant annual interest rates, and/or 
• The minimum repayment to be paid after the fixed-rate period expired, and/or
• The minimum repayment to be paid after the interest-only rate period expired

A further 18 charges relate to ASIC allegations that between December 2016 and February 2018, ME Bank failed to give written notice to home loan customers that their annual interest rates and minimum repayment amounts were changing after their interest-only rate and/or fixed-rate period expired.

The regulator reported the alleged misconduct occurred due to failures in the bank’s systems and processes.

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