(10 April 2026 – Australia) BoQ has agreed a strategic capital partnership with Challenger for its A$3.7 billion asset finance loan book.
Under the deal, BoQ will transfer its asset finance loan book and Challenger will fund new borrowings through the bank for at least one year. BoQ said this would help the bank service more customers, particularly among small and medium-size businesses.
By offloading the assets previously acquired from Investec, the bank will reduce debt funding by A$3.4 billion and return A$300 million to shareholders. BoQ asserts that the capital partnership will optimise its funding base and support its ambitions to service more equipment finance customers, particularly in the small to medium business sector.
The deal has been praised by UBS analysts who described it as “strategically important and directionally positive” whereas Jarden analysts have cautioned that BoQ appears to be repeating a failed financial engineering strategy that left it underfunded after the GFC.
“This innovative partnership with Challenger is an evolution of our strategy to think differently about how we support our customers’ growth ambitions and generate value for our shareholders. We are harnessing our recognised capability in originating and servicing customers, particularly in the SME sector, to generate capital-efficient growth” stated BoQ CEO Rod Finch.
“Net interest income is going to be a negative, largely offset by non-interest income but not entirely. Not having to deal with loans gone bad will also help the bottom line. Equipment financing is not a big part of the bank’s earnings and we decided to offload the portfolio for strategic reasons around the capital release” commented BoQ CFO Racheal Kellaway.