BOQ vague on CIT details

Bank of Queensland yesterday completed two acquisitions announced earlier in the year, one in equipment finance and one in insurance.

The more significant acquisition is the vendor finance business of CIT Group (Australia), and which provides rental finance for firms such as Computer Associates and Western Star trucks.  What BOQ paid is something the bank left deliberately vague in its ASX announcement.

The bank said it was paying $475 million as "a combined total for purchase consideration and debt refinance".  The value of the assets it bought was also left vague, with the bank recycling the original announcement formula that assets being bought from CIT represent roughly 15 per cent of the bank's exciting equipment finance book of $3.4 billion.

While that's around $500 million, the financial statements for CIT in Australia show assets of $760 million at the end of 2009. Financial statements of CIT group suggest receivables in Australia exceeded $1.1 billion at March 2010.

The difference will be the aircraft finance business of CIT that BOQ is not buying.  

Bank of Queensland also said it completed the purchase of St Andrews Insurance (Australia) and also the associated life company, which were sold by Commonwealth Bank (and both formerly owned by BankWest).

BOQ at least managed to disclose what it paid Commonwealth Bank for St Andrews, at $45 million. This is more than three times the capital base of the general insurance business of St Andrews according to APRA data, and 13 times the reported 2009 profit, again according to APRA.

When announcing the proposed purchase of St Andrews in March, BOQ said that the gross written premium of the two insurance businesses was $75 million and there were 165,000 policy holders.

Many of these are already BOQ customers who hold credit insurance policies.  Yesterday BOQ did not mention any data on premium income, which APRA's General Insurance Bulletin shows to be only $15 million.