Investec Plc agreed to sell A$2.4 billion ($2.3 billion) of loans to Bank of Queensland Ltd. 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 U.K., will sell the loans for A$440 million, Bank of Queensland said in a statement. The Brisbane-based lender will raise A$400 million through a rights offer to pay for the loans, which will boost 2015 earnings by two percent and 2016 earnings by four 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 will focus on advisory and corporate banking and on property funds management in Australia, it said in a separate statement. It will also transfer A$2.7 billion in deposits to Bank of Queensland.
The deal “materially increases the size and footprint of our business bank, providing further diversification by geography and industry sector,” BoQ Chief Executive officer Stuart Grimshaw said in today’s statement. The loans are primarily to doctors, dentists and accountants, the bank said.
A team of 310 will transfer to BoQ under the deal, which is subject to regulatory approvals. The transaction is expected to completed by the end of August, BoQ said. The bank will use A$54 million of surplus capital for the deal, which will dilute its core tier 1 capital ratio, a measure of its ability to absorb future losses, to 8.58 percent on completion of the transaction. Its core tier 1 ratio was 8.84 percent on Feb. 28, according to a regulatory presentation.
Gresham Advisory Partners Ltd. advised BoQ.