Westpac concludes sale of insurance arm: BOQ wraps up ME Bank deal

Westpac has completed the sale of its general insurance business to Allianz for $725 million and will enter into an exclusive 20-year agreement to distribute products to Westpac’s customers. 

The bank expects a further payment of $25 million this calendar year subject to integration milestones, with contingent payments over the next five years in addition to ongoing payments under the distribution agreement. 

 Westpac expects to report a gain on sale of approximately $61 million subject to the finalisation of completion adjustments and separation costs, which will be included in its full-year results and classified as a ‘notable item’.  

The sale has added approximately 12 basis points to Westpac’s common equity tier one capital ratio. 

 "We have successfully executed a transition that helps our customers protect the things they value through a long-term partnership with a global insurance expert and helps us become a simpler bank," said Jason Yetton, Westpac's head of specialist businesses and group strategy. 

Last week the lender said it would offload its motor vehicle dealer finance and leasing businesses to a subsidiary of Cerberus Capital Management. 

BOQ completes ME Bank acquisition 

Separately, the Bank of Queensland said it has completed its purchase of ME Bank for a cash consideration of $1.33 billion. 

The acquisition, which was announced in February, was fully funded through BOQ’s equity raising announced on the same day and approved by the Treasurer last month. 

Both would continue to operate as separate banks in the short term with no immediate changes expected for customers, the lender said in a release. 

BOQ said the directors of BOQ would remain in the existing positions on the BOQ board and would replace the ME Bank board, with all current ME Bank board members resigning. 

The regional lender also said it would seek approval from the prudential regulator to consolidate and transfer ME Bank’s business as part of surrendering ME Bank’s ADI licence. 
Following approval, ME Bank would continue as a standalone brand within the BOQ Group. 

BOQ chair, Patrick Allaway, said today was a defining moment in the transformation of the BOQ Group. 

“The completion of the acquisition unlocks new benefits for our shareholders, customer, and people, and is a critical milestone in our multi-brand strategy to create a real alternative to the big banks,” he said. 

George Frazis, BOQ's managing director and chief executive, said the acquisition of ME Bank was strategically aligned and financially compelling. 

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