BNK Banking Corporation Limited (BNK) is now backing a syndicated senior secured warehouse facility, marking the digital bank's entry in structured finance.
The deal enables a growing Australian non-bank lender to access funding through a facility underpinned by high-quality receivables as collateral. As a funding partner, BNK’s acquisition of senior notes in the warehouse is part of the group's broader strategy to establish a foothold in asset-backed lending and private credit.
"We're pleased to partner with experienced counterparties in this transaction and see growing potential in supporting the non-bank lending ecosystem through carefully structured participations," said Allan Savins, chief executive officer of BNK.
The digital bank declined to comment on the facility’s size or the non-bank lender it is backing. But Savins did tell Australian Broker that "these transactions mark a strategic expansion beyond traditional deposits and lending, giving us access to the non-bank lending ecosystem and high-quality structured credit markets."
The CEO also noted that there are additional opportunities for Australian non-banks that wish to partner with the bank.
BNK’s decision to up the ante on its credit exposures and make its debut in structured credit comes as private credit – and the promise of higher returns – continues to grow Down Under.
Globally, the private credit market was estimated to be worth $2.5 trillion ($1.7 USD), as of March of this year, according to Preqin. The Reserve Bank of Australia (RBA) estimates that private credit in Australia is worth about $40 billion, as of October of last year. But market players are optimistic that Australia’s share will grow in step with the expanding global market, driven by tighter regulatory overhead and more cautious bank lending.
"Loans that had been the core of what bank lending was for decades, [are] suddenly unable to be serviced by the banks,” Chris Wyke, co-founder and co-chief executive officer of MA Financial, told Australian Broker earlier this year.
At the same time, demand for private credit is rising, driven by a growing number of self-employed borrowers, complex financial profiles and the surge in small businesses across Australia.
As private credit opens up new lending avenues for businesses, it also allows brokers to expand their reach, sharpen their skill sets and ultimately increase revenues.
"What we're also seeing now is credit — more generally outside of real estate — is being brokerised," Wyke said. The CEO said there is "tremendous growth for brokers" around things like equipment financing, small business loans, car loans and even self-managed super funds.
David O'Connor, managing director of debt capital markets at Australian alternative asset management firm Salter Brothers, which recently agreed to buy private credit fund manager Causeway Asset Management for an undisclosed amount, noted that there's "significant opportunity" in Australia's growing private credit market.
He added that Australia's middle market – a key segment for private credit – "remains underserved by banks, due to regulatory capital impediments and by many global and local private credit players who seek to focus on the larger corporate lending market."
