The bank has appointed Bank of America to manage the sale process, aiming to lift capital efficiency while addressing tighter regulatory oversight. Although the divestment could increase returns and support new lending, it might also result in the loss of one of BOQ’s most profitable divisions.
This move follows BOQ's announcement last month that it was exploring a sale of these assets. The loans are part of the "BOQ Specialist" division, which was acquired nearly a decade ago through a $440 million purchase of professional and asset finance businesses from a South African bank. That acquisition brought in more than $5 billion in loans and deposits, supported by a capital raise involving institutional investors.
Bank of America is reportedly working on a securitisation package to support the sale. Debt will make up 95% of the $3.8 billion value, with buyers expected to contribute roughly $200 million in equity. This structure could appeal to global capital firms in search of high-yielding investments, although some larger lenders may choose not to participate.
BOQ plans to complete the sale through an off-balance sheet arrangement. This would shift the financial benefit and risk, including net interest income and potential credit losses, to an external capital provider. The strategy aligns with BOQ’s broader plan to simplify operations and concentrate on core areas like residential lending. Still, analysts point out the trade-off, as the assets being sold often generate higher margins than the bank’s traditional products.
If BOQ is unable to finalise a sale, alternatives may be limited. Keeping BOQ Specialist could deliver a short-term boost to earnings, but some analysts argue that relying on non-core units to make up for weaker performance in main business areas is not sustainable. The bank has already indicated expected cash earnings of between $375 million and $385 million for the financial year ending 31 August.
