Heartland Bank Australia issues AUD Tier 2 regulatory capital

01 July 2024

Heartland Group Holdings Limited (Heartland) (NZX/ASX: HGH) is pleased to announce that its subsidiary Heartland Bank Australia Limited (Heartland Bank Australia) (BBB Outlook: Stable, Fitch Ratings) successfully completed an inaugural A$50 million Tier 2 Subordinated Note transaction (Subordinated Notes) on Friday 28 June 2024, arranged with the assistance of Westpac Banking Corporation.

The 10-year non-call 5-year Subordinated Notes qualify as Tier 2 Capital under the Australian Prudential Regulation Authority’s capital adequacy framework for authorised deposit-taking institutions (ADIs), and were priced at 370 basis points over the 3-month Bank Bill Swap Rate.

The transaction received strong support from a broad range of institutional investors with demand for the offer nearly three times oversubscribed.

The Subordinated Notes were issued as part of Heartland Bank Australia’s ongoing funding and capital management strategy. The proceeds are intended to support future growth opportunities for Heartland Bank Australia’s specialist banking products, Reverse Mortgage and Livestock Finance.

The successful Tier 2 Subordinated Notes issuance comes just two months after Heartland’s New Zealand banking subsidiary Heartland Bank Limited completed its acquisition of Challenger Bank Limited (subsequently renamed to Heartland Bank Australia). The acquisition made Heartland Bank Limited the first registered New Zealand bank to acquire an Australian ADI. With the inclusion of Heartland’s existing Australian businesses, Heartland Finance and StockCo Australia, Heartland Bank Australia is Australia’s only specialist bank provider of both reverse mortgages and livestock finance.