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BoQ branches facing the chop

Bank of Queensland looks set to close branches as part of a push to cut expenses and lift the performance of its retail banking arm.
By · 15 Nov 2013
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15 Nov 2013
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Bank of Queensland looks set to close branches as part of a push to cut expenses and lift the performance of its retail banking arm.

The lender is also preparing to restructure commissions paid to its owner-manager branch network, in an attempt to lower the risk of loans it writes.

In an investor briefing on Thursday, the bank's head of retail and online banking, Matt Baxby, said BoQ's network of branches was delivering a lower market share than other lenders' branch networks.

Mr Baxby said he expected the bank's branch footprint to fall, and it was "actively looking" at different formats and operating models.

"We have about 4 per cent distribution in terms of points of presence, delivering 2 per cent market share," Mr Baxby said. "We have a third of the size of Westpac's network, delivering about a 10th of their market share. So I think overall ... we are probably slightly overweight as we stand here today."

As customers flock to digital banking and revenues come under pressure, banks have been shrinking the average area of their branches. Mr Baxby said BoQ was considering this option as well.

At the same time as it considers closing branches, BoQ is trying to reach a broader range of customers through the use of mortgage brokers and its Virgin Money business, which it bought from Richard Branson for $40 million in April.

BOQ has about 180 owner-manager branches and 90 corporate branches. The bank did not say where any cuts were likely, but it is understood the corporate branches are the main underperformers.

The potential closures contrast with the bank's aggressive expansion across the country under former chief executive David Liddy.

The bank will next year change the way it pays commissions to its network of owner-managers, in a move to encourage more cross-selling and less risky lending. Branches heavily skewed to lending would be worse off under the changes, managers with a more balanced book would be better off.
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Frequently Asked Questions about this Article…

The Bank of Queensland is closing branches as part of a strategy to cut expenses and improve the performance of its retail banking arm. This move is also in response to the growing trend of customers preferring digital banking options.

The Bank of Queensland's branch network currently delivers a lower market share compared to other lenders. By closing underperforming branches and focusing on digital banking, the bank aims to optimize its resources and potentially improve its market share.

The Bank of Queensland plans to restructure the commissions paid to its owner-manager branch network. This change aims to encourage more cross-selling and reduce risky lending practices, benefiting managers with a more balanced book.

While the Bank of Queensland has not specified which branches will be closed, it is understood that the corporate branches are the main underperformers and are likely candidates for closure.

The Bank of Queensland is considering reducing the average area of its branches and is actively looking at different formats and operating models to better align with the shift towards digital banking.

Virgin Money, acquired by the Bank of Queensland for $40 million, is part of the bank's strategy to reach a broader range of customers, complementing its efforts to expand through mortgage brokers and digital channels.

The Bank of Queensland currently operates about 180 owner-manager branches and 90 corporate branches.

Under former chief executive David Liddy, the Bank of Queensland pursued an aggressive expansion strategy across the country. However, the current focus has shifted towards optimizing branch performance and embracing digital banking.