go ahead.
Thank you for joining us on this audio webcast to discuss the acquisition of Citigroup's Australian Consumer Business. I'm Sallie Miles, Head of Investor Relations at NAV. Presenting today will be Ross McEwen, our Group CEO Rachel Slade, our Group Executive Personal Banking and Gary Lennon, our Group CFO. We'll be referring to the slide pack, which we lodged with the ASX this afternoon. After running through the key slides in the presentation pack, we'll open up to Q and A.
I'll now hand over to Ross.
Thanks very much, Sally, and thanks for joining us this afternoon for this briefing on our acquisition of Citigroup's consumer banking business in Australia. Look, we know it's been a busy time for you, but we believe it would be helpful to talk you through directly about this acquisition. Although it's relatively small, it's important strategically for our personal banking business. It also comes at a time when we're building momentum across our personal bank, and as you've seen with recent market share results. You may recall that when we refreshed our strategy last year, we identified that we needed to build a simpler, more digital personal bank that could deliver better outcomes for our customers, colleagues and shareholders.
This acquisition is an exciting opportunity that will help accelerate the execution of that strategy. The market for unsecured lending and payments more broadly is always evolving, and it's very competitive. We saw this last week with the proposed merger of two largely unregulated payment companies who have ambitions to expand in our markets. In this changing landscape, we are thinking more broadly about our customer proposition and the value we can bring to our customer relationships. In Personal Banking, access to payments and transaction data will be critical tool to drive innovation and deliver market leading customer experiences.
As part of this acquisition, we will also be investing in a new platform that will support these outcomes. I'm also looking forward to welcoming the Citigroup management team who will be joining us when the transaction completes. This team brings specialized product expertise and strong relationships with blue chip white label providers. Rachel will talk to the strategic rationale for the acquisition in more detail shortly. As well as being aligned to our strategic ambition, the acquisition is financially attractive for shareholders.
The total equity consideration of £1,200,000,000 implies a multiple of 8x earnings for the business acquired, and the transaction is expected to be cash EPS and cash ROE accretive from completion. Gary will talk you through the key financial implications shortly. We'll be working very hard to achieve our target completion by March 2022. However, this will be subject to the time it takes for the regulatory approval, which includes APRA, ACCC and the Federal Treasurer. As the Executive of Personal Banking, Rachel will be accountable for the integration of the Citigroup business with our existing Personal Banking business along with the investment in the new unsecured lending platform.
We've included a slide in the appendix which summarizes our approach to integrating these businesses. This integration plan has been a key focus to date and is designed to minimize the impacts on customers. By establishing a separate integration office, we will also minimize any distractions for our Board of Personal Banking leadership team who can focus on getting on with their job. Given the quality and depth of Rachel's leadership team, I'm confident we can successfully execute this transaction and deliver the benefits for our customers, colleagues and ultimately, our shareholders. I'll now hand over to Rachel to talk in more detail about how this acquisition accelerates our Personal Banking strategy.
Thank you, Ross. I'm also very excited to announce this acquisition today. As you said, our strategy for personal banking is to be simple and digital. And a key focus over the last twelve months has been on delivering simple and digital home lending and everyday banking experience while continuing to respond to the changing behavior of our customers. We've been innovating across these areas with the launch last year of Straight Up, which was Australia's First ever no interest credit card, and we're building great momentum in home lending with our ambition to deliver Australia's simplest home loans.
On Slide three of the presentation, we've provided an overview of the Citigroup business being acquired. And while the primary attraction is the opportunity in unsecured lending, we're also acquiring approximately $8,000,000,000 of home loans and about $9,000,000,000 of deposits, and importantly, access to over 1,000,000 customers in total. There's a high quality portfolio broadly aligned to the NAV product offerings, and the customers in these portfolios will be migrated across to the NAV platform. You'll also see a small wealth management book being acquired. This business includes some specialist wealth products for sophisticated wholesale investors.
Between now and completion, we'll be undertaking some more detailed work to identify the opportunities to integrate the wealth business into J. B. Weir and our private bank and to enhance the product and service offering for those acquired customers. We turn to Slide four. The pace and change and the competitive intensity in the payment space continues to accelerate, and scale and expertise are critical to ensuring that we can continue to deliver great products and services and outcomes for customers.
Credit cards are an important product for our customers. They're the most common form of personal debt in Australia, and they remain a key payment choice for customers. There are more than 16,000,000 credit cards in the hands of Australians. As the landscape continues to evolve, access to payment and transaction data will increasingly play a key role in delivering a differentiated service to customers. Credit cards account for more than $275,000,000 payments per month and represent over 40% of all card transactions.
As you can see in the chart on Slide four, the value of credit card payments has steadily increased over time until being disrupted by COVID-nineteen. And although international spending continues to be impacted by travel restrictions, you can see the total value of monthly payments up at about $27,000,000,000 which is almost back to pre COVID levels. If we go to the next slide, we believe this acquisition will help us accelerate our ambition to deliver a simple, more digital personal bank by supporting our investment in a new platform and through access to the expertise of Citigroup's management team. I'm positive that our investment in a strategic technology platform will deliver ongoing innovation in unsecured lending and payment products and services. This will show up in things like speed to decisions, personalization and new propositions.
And note that while this platform is being built, the Citigroup products will continue to be hosted on Citigroup's global systems. We're very excited too to be gaining the expertise of the management team in Australia who have an average tenure at Citigroup of ten years. They bring to us deep specialist expertise in unsecured lending and digital marketing that they've gained by being part of one of the largest card issuers globally. This capability includes experience in developing and growing white label relationships with blue chip clients and delivering on that digitally. They also bring a more sophisticated approach to campaign modeling and analytics.
We, of course, are already an experienced partner in the white label space with mortgages through our advantaged business. And with a leading NPS advantage, we'll be supplemented now by white label opportunities in the unsecured lending space that Citigroup brings. We see an important opportunity to further expand these white label relationships with both existing and new partners and serve a broader customer base through our common Australian brands. And then on Slide six here, we highlight the incremental scale outside unsecured lending in mortgages and deposits that's brought to the Personal Bank. Together, these portfolios bring approximately 400,000 potential new customers to NAV.
I'll now hand over to Gary, who's going to run us through the numbers.
Thanks, Rachel. If you want to turn now to Slide seven. We have identified total synergies of approximately 130,000,000 per annum on a pretax basis, representing approximately 30% of the stand alone cost base of the businesses to be acquired. These are expected to be achieved over three years, with the majority to be achieved in the first two years. These synergies will be driven by a combination of our unsecured lending businesses on a new technology platform and the associated savings in group infrastructure.
There are also savings identified across support functions, vendor contracts and property rationalization. As Rachel outlined, while we've not included these in our base case, there are also potential revenue upside from expanding the white label relationships. We expect to incur acquisitions and integration costs of $375,000,000 in total. The majority of these costs are expected to be incurred in FY 'twenty two and FY 'twenty three. This includes approximately $165,000,000 for the new unsecured lending technology platform.
Turning now to Slide eight. As we noted upfront, as well as being aligned to our strategy, the acquisition is financially attractive to shareholders. In terms of incremental financial impact for NAV, the Citigroup business being acquired generated approximately $330,000,000 of pre provision profits and $145,000,000 in cash NPAT for the year to June 21. The equity consideration required to fund the acquisition premium plus the incremental risk weighted assets is approximately 1,200,000,000 This implies a multiple of 8x pro form a cash NPAT. The acquisition is expected to be marginally cash EPS and cash ROE accretive from completion, with the modest impact reflecting the relative size of the acquisition.
In considering the forecast contribution the business will make to NAV, there are two important points to highlight. Firstly, for any broker originated mortgage book, attrition is a key issue. Clearly, we'll be taking steps to maximize retention, but we've modeled forecast earnings on the basis that the mortgage book will decline over time. Secondly, card balances in the short term may continue to be impacted by the elevated repayment rates we've seen during COVID. Over the medium term, we are confident that our investment in systems and access to Citigroup's capability will help drive growth in this portfolio.
As you would be aware, our strategic ambition includes targets for cash group OpEx to be $7,700,000,000 between FY 'twenty three and FY 'twenty five. Once we've undertaken more detailed analysis, we intend to update the market in their first half 'twenty two results on the impact of this acquisition on the group OpEx targets. In the meantime, we will continue to manage towards the $7,700,000,000 target. Sally, I'll now hand back to you for Q and A.
Thanks, Gary. Before I pass to the operator to moderate the Q and A, just the usual reminder to please limit your questions to two. I'll now hand across to the operator. Thank you.
Thank you. 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Andrew Lyons with Goldman Sachs.
Just two questions for me. Just on Slide 11, note that you'll be entering discussions with the white label partners. Can you just confirm that all the white label partners do have change of control terms in their contracts? Firstly, whether there's any financial protection for NAB to the extent that you were to lose any of those contracts? And finally, just if there are if you've had any early discussions just with partners about the process of shifting from Citi on to NAV?
And then just a second question. You've noted that you'll be spending $165,000,000 on new unsecured lending platform. Can you just maybe help us to understand why the unsecured book isn't just being put on the existing NAV's existing systems? Or does, I guess, this acquisition provide you with an opportunity to sort of upgrade the product suite or the sorry, the platform for the broader Personal Bank?
Yes. Look, thanks, Andrew. I'll take the first, and Rachel will take it on the new system. Look, there are look, I'm not going go into the details of the white agreements, but there are protections for both the white label partners on change of ownership. And also, we have some protection of the negotiated position in Citi.
We have had preliminary conversations with the major players of the white label space and told them about our rationale for taking over this business and our ongoing support. And to date, it's been quite positive, but time tells. And whenever you do disrupt a relationship with this occasion time, people sometimes want to rethink it. But at this stage, we're pretty positive about the conversations we've been having. We do want to stay very strongly in the white label business, and we've expressed that desire to all parties and to also expand the business that we have with them in different ways, some different things that the bank wants now that Citi may be able to do.
Which brings us to the second point of your question, which is around the systems capability, which is a big part of this. And I'll pass over to you, Rachel, just to talk about our thinking behind why a new system and the need for
Yes, sure. Thanks, Rob. We obviously pushed and pulled a few different pathways to integration on this transaction. And frankly, with the rising competitive intensity space and the scale that this acquisition brings us, it actually is a really unique opportunity for us, as well, to build out a new platform. And, of course, the city's technology doesn't come doesn't come with steel.
So we'll stand up new tech and then migrate the the Citi products and services over to that and and network services for that for that matter. And we'll be able to get something something very, very modern and nimble out of box. So it's pretty unique and exciting from that perspective.
Thank you. Your next question comes from Andrew Teagues with JPMorgan. Please go ahead.
Good afternoon. Hi, Russ. Thanks for the question. So I had a couple. Firstly, what gives you comfort from the ACCC perspective on competition, noting that this acquisition would take the big four to over 90% share of the APRA credit card system and that the ACCC heads already said that they would look closely at any such deal?
And second question, just around white label, obviously, being a big driver of the customer base. And that in recent times has been tending towards more direct, customer acquisition. So just interested in the thoughts around that strategic not a strategic shift, but just a different path to what the one that you've been taking recently.
Yeah. Look, just upon the, there hasn't been a significant reduction in competition. We don't believe we wish that that's the case, but we have to leave that with the agency to do the investigation. There are quite a few players that don't sit in the APRA numbers. So I think if you look across the industry, our view is there are a lot of competitors today, and there will be after this as well.
So from that perspective, even this acquisition doesn't take us to a number one position. It takes us to a two position if we took all of the white label included and certainly a lesser number, probably in the third position if it was excluded without the white label sort of looks after. We're staying in the white label business so that we don't reduce any competition from those players that we look after here. And we see that as something we want to stay in that business. So you raised the second point about white label.
We're actually pretty strong in the white label business for mortgages and have been we see that as a strategic area we're staying in, and we see this as an opportunity to get into the white labeling and the unsecured business that we're not today. So we've had we do have strength from the secured part of the white label through a business called Advantage, and that's going very, very well. It's probably got one of the highest net promoter scores, a higher score in the mortgage market today. So when we do it well, we know we can do it very, very well. So we do see that as an opportunity.
And it is a scale business. And with the new system underpinning it, with scale and the data, we think we can do a really good job in this space, but it does include white labeling. There's some very good parties in the white label arrangement, and we look forward to doing business with them and enhancing that business as well because we do bring some other capabilities that they now will be able to use be that white label or through our other parts of our business, particularly our corporate and business bank.
Thank you. Your next question comes from Victor German with Macquarie. Please go ahead.
Thank
you. Hi, Ross. I was hoping to actually follow-up on the earlier question with respect to IT. In this year, you've effectively made two acquisitions, eighty six thousand four hundred, where you tried to accelerate growth in UBank and support IT platform there. And it sounds like with this transaction, you're also using the opportunity to invest $165,000,000 to build and improve your systems.
And while you're doing that based on the costs that you're looking to incur, it looks like you'll be paying reasonable amount of money for using Citi platform. I guess my question is sort of what message should we take from all this with respect to the broader systems for the rest of the bank and the potential need to actually address some additional underinvestment in other parts of the bank? And is that $7,700,000,000 OpEx target still reasonable in your mind, Ross, now that you've been in the bank for a while and you've observed all the
systems that are in place? Yes. Thanks, Victor. But can I start with just a wee bit of history over the last four years where the bank has, first off, looked to stabilize its platforms because we were having a completely unacceptable level of outages because our technology was not resilient enough all day and every day in the marketplace? So the first three years of that four years was making sure that the platforms were resilient and stood up, and we set ourselves a fairly aggressive target of reducing outages, which we have been meeting, and we've set ourselves in 2021 a reduction of 30% of outages, bringing it down to a much more acceptable level.
But that was the first three years of the technology plan. Now that we have created good stability in our core systems and replaced many of the linkages, we are now looking at what makes a difference for customers and for our colleagues. And that's the path we are now on. The 86,400 was one that we chose not to distract the red star by the NASDAQ by bringing it across onto our core systems. We thought it would be better if we found a system or let them build their own system that was more dynamic, that was much better suited for a smaller bank.
And that's why we chose 86,400, and that integration between those two players onto the 86,400 platform will happen in the next twelve to fifteen months. Planning is pretty well done and work underway. And this one here is really an opportunity to look at the unsecured systems which we operate, which are quite old. And they are, in the next few years, ready for upgrade anyway, and we're just taking the opportunity now that we've secured the subject to regulatory approval. Of course, we've secured the Citi group consumer business here, bringing them both across onto a new platform over time.
But what we have got is now stable platforms. And now we're looking to upgrade our systems and integrate with what customers see and feel and also what our own staff use all day and every day. So it's a and I think the amount we're spending is the right amount for this bank, and we can do a lot with 1,200,000,000.0 to $1,300,000,000 a year. That's a lot of money. And we've certainly shown in the last year, as we've been much more disciplined with our project management, that, that is enough money to make a real difference in the bank.
So you don't feel that there is other areas where you would like to spend additional money, given that you have fairly significant, as you highlight, surface capital position to accelerate some of that momentum in technology in other parts of the business, you don't feel like you need to take additional costs?
At this stage, no. As I said, we're spending 1,200,000,000.0 to 1,300,000,000.0 on the business on an annual basis. It gets to a point where you can keep throwing money at it, and it doesn't make a lot of difference. The last $100 to 200,000,000 you see is hard to find the benefit for. So I think a much more disciplined approach we're taking now is getting us a much better result, and we're spending enough to make a difference in this marketplace.
And as you've seen from what we've been doing from a market share perspective from a personal bank and also in our business bank, the strategy is working. It's Barry. I might just add to what Ross is saying. And as we've said and Ross has said on a number of occasions, it's really taking a balanced approach. We're looking to grow, and that's our first use of capital to grow where we see these opportunities.
And there are certainly in Rachel's business, we are seeing plenty of opportunities at the moment. And I think balancing that that focus on growth with a focus on productivity. And that goes to all the system decisions as well where you're balancing efficiency and how do we get cost out and improve our productivity of our platform while seeking opportunities for growth where you have to be more digitized in terms of what you're delivering to customers. So all the way through, we haven't had an all the way growth pivot or all the way cost out pivot. It's been in some respects sort of more nuanced because we have the ability to respond to opportunities when we see them.
Your next question comes from Brian Johnson with Jefferies.
Congratulations on what ostensibly looks like a pretty good acquisition, but a few questions. The first one is, when we have a look on Slide seven, you're basically saying that there's acquisition costs of GBP $375,000,000, of which GBP 165,000,000 is to build the new system. But then below it, you say that you're amortizing it over five years. Ross, can we get a feeling what the total spend on the new system for the unsecured credit will be? Surely, not going to you're saying you see what I mean.
You're saying £165,000,000 over two years, but you're saying you amortize it over GBP 5,000,000. And I wouldn't have thought you amortize it at the same run rate in the early years as you're building it. Can we just get a feeling for what the total budget is for the spend on this?
You got the number there on the actual Yes, Brian, it's the 165,000,000 is the number. How that will turn up in the P and L will the original upfront OpEx will go through integration, and then we'll amortize the balance and portion that we capitalize over the five years. And well, that's just an estimate of five years of market trees. But in terms of cash and what it should be focused on to 165,000,000
So 165,000,000 okay. I think that's a little bit clumsily explained in the slide. The second one, Gary, is when we have a look at NAV, you guys have got a very low capitalization threshold on your software. You've had heaps of opportunities to lift it. But when you have a look at like the 86,000 4 hundred decision, it's really telling us that the state of the software wasn't that flash.
When we have a look at the unsecured credit, it's telling us the same thing. Is there an opportunity here to really just take a very big hit on the capitalized software? Take it costs you nothing. And as I say, your capitalization threshold at five at two you increased it from 2,000,000 to £5,000,000 in FY 'twenty, but that's still well below your peers, which makes your balance look high. Is there an opportunity to reset down that to increase the capitalization threshold?
Well, we've got no plans on that at the moment. And it's something we will regularly have a look at, but we're pretty comfortable with where that currently sits. And over time, you've seen that threshold going up. And actually, the amount where we OpEx versus capitalize, there's more OpEx. It's more the trend and less capitalization and also the useful life, particularly when you invest in digital assets and these front end customer facing assets tend to be shorter.
Whereas Ross talked about the previous phase we've been going through, the long term foundational infrastructure tends to have a longer useful life. Reasonably comfortable with 5,000,000 There's a balance, Brian, but I get your point. I mean I moved it from the 2,000,000 to 5,000,000 in my first few months here. I think Phil had moved it from $05,000,000 to $2,000,000 only a few short periods of time before me. So but I'm reasonably comfortable with it at five.
We are running a pretty balanced and disciplined approach to where we're spending the money. And as Gary said, a lot of it is around technology, which is getting a shorter lifespan to it anyway.
Yes. It's not so much about what you're spending on it, Ross. It's really about just bringing it to what the balance should be. The point I'm trying to make is that when we have a look at it, the last two transactions you've done have told us that the IT probably isn't as good as we thought, and yet you've got this very low capitalization threshold. At some point, you'll run out of the opportunity to basically address it.
I really commend you. I think it would be a very sensible thing to do. Just a final thing, if I may. On Slide five, you mentioned the horrible words buy now, pay later. Now we've read a little bit on what Citi is doing here, but it looks mighty like the CBA one, which is basically to the merchant, it will look like a Mastercard product and to the retail customer, it will look like buy now, pay later.
Could you just give us a feeling about how you see this buy now, pay later product that Citibank are working on actually working? Because I believe it's due to launch very shortly. So can I get a feeling on what the interchange fee is to the retailer and what it looks like to the customer?
Brian, we won't give you that detail here because they haven't launched the product yet, and I wouldn't want to preempt them on that. But other than to say, they are working on a product launch just as we are. We see them as different and into different groupings, so we're pretty comfortable with them continuing on, along with a number of other developments they're working on. But you are seeing, as we saw in the credit card industry, what, twenty odd years ago, you start with a reasonably healthy margin on interchange and quietly it gets lower and lower. And I think you're starting to see that happen with the buy now, pay later.
It's exactly the same thing happening. And we think we can, with both with this deal through Citi and its white label partners answering ourselves with our own customers, I think we've kind of put a reasonably good proposition into the marketplace for both merchant and the consumer but in quite a different way to traditional buy and buy later. But I
So Ross, so DAB is working on one and Citibank's working on one. Yes, we are. Have two
well, we've got two quite distinct customer groupings. One is a white label customer grouping, and the other one is our own customer groupings and merchants, which we've got, as you know, tens of thousands of them.
Thank you very much, and congratulations on
the pricing. Thank you. Thanks.
Thank you. Your next question comes from Richard Wiles with Morgan Stanley. Please go ahead.
I've got a couple of questions. Firstly, 145,000,000 of earnings on about $1,000,000,000 of net assets or the acquisition price of 1,200,000,000.0 looks pretty low for a business which is twothree mortgages and onethree unsecured lending. So could you give us any more detail on why that return is low? Is it because the Citigroup cost base is too high? Or is it because the margins in the mortgage book are low?
Or does it have something to do with the mix of the unsecured lending business?
Yes. So Richard, why it's Gary. Look, I think there is something to the in terms of the 145,000,000 that is the Citibank cost base. We don't think that, that would there's a lot of costs that we already have. So on a marginal basis of what costs come across to us, it'll look more attractive.
And that's why we've called out the $130,000,000 in synergy benefits that we'll get over those two to three years. So I think that's an important factor to keep into consideration as well. And quite a bit of that cost base is not sitting onshore. So it's just sitting offshore because it's an outsourced arrangement to their in their outsourcing as offshore arrangement. So we believe we can bring some of that or get them back onto shore into a structure we already have ourselves.
And there won't be much change to the onshore activity because it's more customer related.
Okay. And just my second question. I think the way to interpret your commentary on the financial impact is that cash EPS on completion implies the impact pre synergies. But then you say $130,000,000 of synergies will be largely offset by the mortgage revenue decline. So does that mean that even on a post synergies basis, the transaction is only marginally EPS and ROE accretive?
Again, there's a few things to point out there. Well, one, the really effective part of the transaction is what Ross and Rachel talked about, the strategic acceleration of the strategy, the capability that we get, the 1,000,000 plus in customers that come across and the associated data. So that is the core. Certainly, the financial aspects, we think, are fair and attractive. The exact question on where we'll end up net net will really depend on and this is part of driving some of the integration costs to get the integration right.
The decline on the revenue book will be less, the amount of customers that we can retain. And we're very focused on that to try to retain as many customers as possible. And so we hope to get in a position that any deterioration on the revenue side will be more than offset by the synergies we get on the cost side. So net net, our plan is to be in front, not net square. So then you're starting to get a bit more accretive over time.
But in the context of whole bank, though, it's relatively small in terms of accretive just by nature of the size of the transaction.
Thank you. Your next question comes from Nathan Zaya with Morningstar. Please go ahead.
Afternoon. I think you've already covered off the what I was curious about is more unsecured lending is currently being disrupted. And I was just concerned that like well, how you would think about whether NAV would be falling behind if its focus is on building a new platform, but you're fairly comfortable you can bring new products to market simultaneously by the sounds of things?
Yes. Look, we believe the capability of both of the Citi team and ours is we can bring product to market, made even more relevant by a more flexible system, which Rachel talked about. We don't believe that the credit card business is a massive decline. You saw a drop because of COVID. People are sitting at home, not buying a lot of goods other than online.
They're not going out and shopping much. They're not having a beer on a and a meal on a Thursday night, Friday night or Saturday night. And they're getting $750 into their accounts, and they're paying off their credit card and any debts that they have. So you did see credit card usage come down. But as we're showing here, it's starting to come back up again.
We believe that it will stay as a very strong part of the payment structure. If you have a look at thirty years of history of payments, they change constantly. And I think you've just seen another sort of change in the payment structures going on at the moment with Buy Now Pay Later, they still account for a very small percentage of all payments going through the marketplace. So with credit cards of about 40 odd percent, we still think this is an attractive market to be in. But you do need some scale.
Can I just add one thing? The other thing we're seeing is definitely still appetite for new propositions and innovation in the card market. I referred to Tom a little bit earlier about our straight up no interest credit card that we launched last year, It still accounts for one in three applications we see after that product. And 60% of those customers are 35. 70 percent of them are new to credit, which I think is a really interesting statistic.
The proposition is still appealing.
Okay. Thanks for the extra detail.
Thank you. Your next question is a follow-up from Brian Johnson with Jefferies. Please go ahead.
Just the integration costs, that will be taken through the notable items as opposed through the cash earnings, correct?
Integration costs, normally with the exits and the take on here, they go through noncash.
Okay. So the okay. And then the second one, if I may, Gary. You're building an unsecured lending platform, but you've got a big book of housing. And you're telling us that you'll get some accreditation.
What's the pathway to basically transition the housing book onto your systems? And how confident are you that you will be able to get advanced accreditation for it, like, within that time frame?
I'll let you talk about the advanced accreditation. Integration is pretty straightforward, right? It's a pretty simple home lending book, so it would just be a straightforward migration over time.
So it does so it maps out beautifully with your existing system, does it, Rachel?
Yeah, pretty much.
Yep. Okay. And Brian, on that Rachel also touched on earlier, what we believe is a pretty high quality mortgage book. And what you need is to get the data across. So that's all been part of transaction discussions with Citi to make sure we've got access to that data and enough of the history.
And once you get the history on that data, you bring it across, then we have to work it through in our models. And then it's the engagement with, APRA on do we have enough data to validate our advanced models and then we go through an accreditation phase. Now as we've said three years, we hope to do a lot better than that, but that's sort of more of the upper conservative end.
And Gary, you guys have already spoken to APRA about that approach, that you get used the historic data?
Yes. It's quite standard, that approach. And we've spoken to APRA about the transaction already and the fact that we'll be going through that approach. Sounds like we might have come to the end of questioning. But just as I go back, we used to keep going.
Whilst it's a small financial transaction for us, strategically important, Therefore, good. Thank you very much for the question. We thought it was worthwhile just spending some time on it. And you've obviously got some features to get to or cross to get approval, both ACCC, APRA and the Federal Treasury, and we'll start the process now. And look, thank you very much for your questions.
So thanks for organizing at very short notice. I know you've all got a reasonably busy week, and we'll be chatting to Gary. We'll chatting to you later in the week. There will be a Q3 later in the week. I don't want to start doing lots and lots of presentations on Q1 to Q2 here.
Thank you very much for your time. Thanks for organizing, Sally.
Thanks. And if anyone has any further questions, just reach out to Investor Relations.
Yes. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.