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· Posted on
February 21, 2024

Bank of Queensland and Bendigo and Adelaide Bank could save $202m by becoming best banking buds

What's the key learning?

👉 Background: Bendigo and Adelaide Bank and Bank of Queensland are the 6th and 7th biggest banks in Australia based on their total assets. And both are old school - founded pre-1874.

👉 What happened: Back in 2007 and then again in 2018, the topic of a merger between the pair was raised so that they could better compete with the Big 4 banks - but the talks never really got anywhere. Now, the prospect of a $10 billion merger has been re-raised.

👉 What else: This would make the merged company the 5th biggest bank in Australia by assets. But more importantly, this merger is expected to lead to about $202m of so-called synergies.

What's the key learning?

💡 Synergies happen when a merged company is more valuable than the two separate companies were before they merged.

💡 These synergies can happen for a few different reasons. In this case:

  • Both banks already have a huge branch network so they could cut down the number of branches and save $84m.
  • Both companies need to make large digital investments, which is difficult without size and scale of a well-capitalised business

💡 By combining the strengths of two separate companies, the merged company can be more successful and profitable than either of the original companies could have been on their own.

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