Bank of Queensland poised to sell Investec finance business: sources

Bank of Queensland is simplifying its business through asset sales. Picture: Jono Searle

Speculation has been mounting Bank of Queensland could be moving towards a sale of the business it purchased from Investec almost a decade ago that added $2.4bn of loans and $2.7bn of deposits to its portfolio.

The Brisbane-based regional bank, under the leadership of Stuart Grimshaw, paid $440m for the Australian professional finance, asset finance and leasing businesses, mostly servicing dentists and doctors, from the South African bank in 2014.

Assisting on the deal was investment bank Goldman Sachs, which helped raise $183m from institutional investors to fund the acquisition.

Bank of Queensland described the transaction as a “compelling opportunity” that fit with its strategy.

It boosted Bank of Queensland’s exposure outside Queensland and was part of a quest to enhance its organic growth.

The group executive at the time, Brendan White, said the acquisition would both grow and diversify Bank of Queensland’s banking footprint.

The latest speculation comes as Bank of Queensland announced this year that it has sold its $NZ238m portfolio of New Zealand loans to UDC Finance for 91 per cent of book value, which was part of its simplification program.

The bank said in a statement at the time that the sale streamlined the bank’s operating model and simplified the compliance environment by exiting a small, non-core lending portfolio in an overseas jurisdiction.

It represented less than 0.5 per cent of the bank’s net loans and advances in the 2023 financial year, and made an immaterial contribution to Bank of Queensland’s net profit in the same period.

Bank of Queensland chairman Patrick Allaway stepped in last year to take the reins of the bank as chief executive after former boss George Frazis abruptly departed in 2022 following his ambitious purchase of ME Bank in 2021 for $1.3bn.

Integrating the acquisition is understood to have been a challenging assignment, while Bank of Queensland has been upgrading technology that has proved to be a complex project, and as a result, it has inhibited its ability to embark on more corporate activity.

Bank of Queensland was advised by Goldman Sachs and UBS on that transaction, along with Luminis Partners.

The bank also purchased Virgin Money in 2013 for about $30m.

Its share price has fallen almost 30 per cent in five years and was trading on Tuesday before market close at $6.12, with its market value at $4bn.

Analysts believe that regional banks are under pressure from the regulator to simplify their businesses.

Regional rival Bendigo Bank last year sold its equity stake in Homesafe, will sell out of Cuscal when it floats, has offloaded its superannuation business and ended its partnership with rural supplies company Elders.

Bank of Queensland will announce its half year results on April 17.