A state opposition promise to put Bendigo & Adelaide Bank in the box seat for a $250 million state government banking contract should it win the election has stunned the finance sector.

In an announcement released on Wednesday, Opposition Leader Matthew Guy said if he were elected, his government would look to sign a new contract with Bendigo to provide payment and banking services when the current deal with Westpac expired in 2020.

Matthew Guy wants a government he leads to bank with Bendigo & Adelaide Bank. Picture: AAP Image/ David Crosling

“Returning government banking to Victoria through an agreement with Bendigo Bank to do government banking would be the biggest financial boost for regional Victoria since the gold rush with billions of dollars of transactions each year,” he said.

“We expect hundreds of Victorian jobs, almost all regionally based, would need to be created to service this massive account.”

Shadow Treasurer Michael O’Brien said the opposition expected to negotiate an agreement with Bendigo Bank “that delivers value for money”.

Asked to clarify whether the contract would be subject to a full competitive process, a spokesman for Mr Guy said: “We expect to enter into competitive negotiations. If it is not a competitive deal for Victorians, we will have to look elsewhere.”

It is understood the Opposition would have a preference for either one of the large Melbourne-headquartered banks – National Bank or ANZ – should a deal with Bendigo not work out.

A Bendigo & Adelaide Bank spokesperson said it welcomed the potential to provide services to any political party, government or not-for-profit.

Asked if the bank had placed a bid to win the contract the last time it was offered, the spokesperson declined to comment citing commercial confidentiality and customer privacy concerns.

Westpac also declined to comment, citing customer confidentiality.

But well-placed sources in the industry expressed strong surprise that the government would signal its preferred provider ahead of what would usually be a hotly contested tender.

“These things are usually subject to very strict tenders and probity arrangements,” said one banking observer.

“These are hard-fought for tenders. A lot of this work is about payments, it does involve the need to have the capacity to do that, maybe Bendigo does. Ministers don’t usually get involved in tenders and commercial contracts.”

Another source described the pronouncement of Bendigo as the favoured provided as “crazy”

“It’s crazy isn’t it? To unilaterally award a contract just because the head office is in Bendigo,” he said.

Bendigo takes in the seats of Bendigo West (which Labor holds with a 12.2 per cent), Bendigo East (Which Labor holds by a margin of 5 per cent) and Ripon which the Liberal Party holds by a margin of less than 1 per cent.

Labor was contacted for comment.

–The Age