Heartland Bank acquires Challenger Bank

Heartland Bank has officially acquired Challenger Bank, becoming the first NZ-registered bank to acquire an Australian authorised deposit-taking institution (ADI).

After Heartland Group Holdings Limited received indicative regulatory approvals from the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of New Zealand (RBNZ) last month, it revealed that it was given full approval on 30 April.

As such, Challenger Bank started operating as a digital specialist bank known as Heartland Bank (Australia) as of yesterday (1 May).

According to Heartland Group, Heartland Bank (Australia) will focus on providing “specialist banking products” and will be the only Australian specialist bank provider of reverse mortgages and livestock finance once Heartland Finance and StockCo become part of the Australian bank.

Heartland Group has ownership of Heartland Finance, an Australian non-bank lender that provides reverse mortgages, which holds 42 per cent of Australia's reverse mortgages market share, according to the group. The group also owns StockCo, an Australian livestock finance provider, which caters to food producers.

The group said that Heartland Bank (Australia) would continue to raise deposits under its term deposit offerings and that expansion would be enabled via access to retail deposits that would provide “the advantage of a lower cost of funds”.

Heartland Bank (Australia) may also pursue motor and asset finance opportunities.

Speaking on the possible expansion, Heartland Group said: “Heartland has a history of success with these products in New Zealand, and considers these sectors to be under-serviced by larger banks in Australia.

“The acquisition is a critical step in Heartland’s strategy for achieving its long-term growth ambitions and expansion in the Australian market, where it is already well-established.”

The managing director and chief executive of Challenger Limited, Nick Hamilton, said: “With the sale of the bank now complete, Challenger will focus on its core life and funds management businesses, continue to execute our growth strategy and deliver on our purpose of providing customers with financial security for a better retirement.”

Heartland Bank (Australia) appoints a CEO

Michelle Winzer, a former CEO of Bank of Melbourne, has now been appointed as the CEO of the newly acquired digital bank. Winzer served as the CEO of Bank of Melbourne from June 2017 to February 2020 and was most recently the CEO of financial services provider RACQ.

She is set to begin her new role on 22 July 2024.

In the interim, Chris Flood – the deputy CEO of Heartland Group – has been appointed as the acting CEO of Heartland Bank (Australia) effective 1 May.

Flood will return to his role as deputy CEO later in the 2024 calendar year after a “comprehensive” handover period with Winzer.

The Heartland Bank (Australia) board of directors has also been finalised with Geoff Summerhayes being appointed chair and as an independent, non-executive director.

Summerhayes is also serving as the chair of insurance provider Zurich Australia and New Zealand and research provider Beyond Zero Emissions.

Shane Buggle and Lyn McGrath – previous members of the Challenger Bank board – have been appointed as independent non-executive directors, alongside Vivienne Yu and Bruce Irvine, who were formerly on the Heartland Bank board of directors.

[Related: Heartland gains approval for Challenger Bank acquisition]