Investec: Australian bank to buy out loans

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Investec has agreed to sell A$2.4 billion (R23.64bn) of loans to Bank of Queensland (BoQ), with the Australian regional lender to sell new shares to fund the transaction. Investec, which owns a bank and money manager in South Africa and the UK, would sell the loans for A$440 million, BoQ said on Friday. It would raise A$400m through a rights offer to pay for the loans, which would boost 2015 earnings by 2 percent and 2016 earnings by 4 percent, it said. The transaction will bring in 33 000 customers to the Australian bank and expand a loan book in a market dominated by the country’s four major banks. Investec would focus on advisory and corporate banking and on property funds management in Australia, it said. It would also transfer A$2.7bn in deposits to BoQ. The deal “materially increases the size and footprint of our business bank, providing further diversification by geography and industry sector”, BoQ’s chief executive, Stuart Grimshaw, said in Friday’s statement. A team of 310 people will transfer to BoQ under the deal, which is subject to regulatory approvals. The transaction was expected to be completed by the end of August, BoQ said. The bank will use A$54m of surplus capital for the deal, which will dilute its core tier one capital ratio, a measure of its ability to absorb future losses, to 8.58 percent on completion of the transaction. Its core tier one ratio was 8.84 percent on February 28, according to a regulatory presentation. Gresham Advisory Partners advised the Australian lender. – Bloomberg

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