Time for BOQ to be a business builder

Bank of Queensland is buying its third, specialist finance business in a decade with the takeover of the main operating businesses of Investec Bank (Australia) Ltd.

These comprise Investec's professional finance unit (including the deposits business) and the asset finance and leasing businesses in Australia.

Investec said the sale price was an A$210 million premium to the tangible net asset value for the shares in IBAL. BOQ put the purchase consideration at $440 million, including $230 million to capitalise the business.

A $2.4 billion loan portfolio will transfer to BOQ with what the bank called "a relatively low-risk profile and attractive margins."

Dentists and other medical professionals are the main client group, along with accountants.

The bank will also pick up $2.3 billion of retail deposits and $0.4 billion of wholesale deposits.

BOQ is counting most of the new loans as "commercial", with aggregate of commercial and BOQ Finance assets at 25 per cent after the purchase, a rise of five percentage points.

BOQ bought UFJ equipment finance (formerly Sanwa) in 2003, which accelerated originations under new ownership.

The bank bought CIT in 2010, a funder of vendor finance to many iconic brands. The inclusion of CIT helped paper over a decline in business finance receivables at BOQ linked to worries over credit quality in the aftermath of the GFC.

These past takeovers have not really delivered the diversification in business mix or the cross-sell benefits promised at the time.

Equivalent pledges are an inevitable part of the present BOQ management's pitch on the merit of the Investec acquisition, and yet another way in which the incumbents can distinguish themselves from their predecessors.