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BOQ denies it's a takeover target

AAP  The Australian   October 21, 2012

THE head of the Bank of Queensland (BOQ) has rejected speculation that his company is now a takeover target after it posted the first loss by an Australian bank in two decades.

Chief executive Stuart Grimshaw said the worst was behind the bank, just days after declaring a $17 million full year loss due to $401 million in costs from unrecoverable loans.

Mr Grimshaw denied the bank would have to be taken over at some point.

"No I don't think that's the case," he said.

"When we recorded a loss in the first half, that was about a $90 million after tax loss, the second half we reported a $70.3 million dollar profit."

While the Bank of Queensland was exposed to bad debts in the southeast corridor of Queensland, it still had a great future, Mr Grimshaw told ABC's Inside Business program on Sunday.

"We believe we have seen the worst.

"It won't be an instantaneous return to like 2006 bad debt expense levels, but we believe that within the next three years we will return to a level similar to that."

He said the cost of deposits was increasing.

"We've actually been able to manage both sides of the balance sheet pretty well in what's been a very tough and competitive market."

The company shed 100 management roles about four weeks ago after highlighting seven layers of people between the chief executive and customers.

"In a small bank that's just way too many," Mr Grimshaw said.

"In Bank of Queensland Finance, and even at the bank, we have a number of people doing roles which could be better shared rather than isolated."

Mr Grimshaw confirmed the bank's funding was made up of 59 per cent deposits and 41 per cent wholesale funding.

Around 40 per cent of its business was now done outside Queensland, with 29 branches in Western Australia, 35 in Victoria and 42 in NSW.

He added that the bank was not interested in being a funds manager or a large institutional bank.

"We're not going to bank every agri-business in Australia."

On Friday BOQ shares closed 11 cents, or 1.5 per cent, higher at $7.38.

Last modified onTuesday, 28 May 2013 07:10

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