Westpac sells supplier finance business to focus on core banking business
(Reuters) – Australian company Westpac Banking Corp WBC.AX on Friday agreed to sell its supplier finance business to a U.S. private equity firm, as part of its strategy to focus on core banking and reduce its portfolio of underperforming businesses.
The unit, which helps third parties fund small-scale equipment finance loans, would be sold to Angle Finance, a holding company of Cerberus Capital Management, Westpac said.
Westpac did not specify the value of the transaction, but said it expected a small book loss on the sale and negligible impact on the bank’s balance sheet and capital ratios.
The deal will result in the transfer of approximately A $ 500 million ($ 359.80 million) in Westpac customer loans and is expected to be completed by the end of April 2021.
In May, the Australian bank launched a review of its underperforming divisions, including wealth management platforms, retirement and retirement products, insurance and auto finance.
Westpac’s vow to create a leaner, more bank-focused business came after cutting a dividend payout and posting a drop in first-half profits, hit by the high costs of a money laundering scandal and an increase in charges for provisions for bad loans due to the coronavirus outbreak.
Report by Rashmi Ashok in Bengaluru; Editing by Shinjini Ganguli and Shounak Dasgupta