(29 March 2012 – Australia) Bank of Queensland (BoQ) chief executive Stuart Grimshaw outlined cost cutting schemes including cutting commissions paid to its owner-manager branch network.The move is expected to affect much of the BoQ’s branches in New South Wales and Victoria, the source of much of the regional lender’s growth over the past decade.
More than two-thirds of BOQ’s 255-strong branch network operates under a franchise system, which involves local operators putting up the cost of opening branches as part of a sales-based remuneration structure.
Managers are rewarded on performance for increasing sales of loans and deposits.
The move comes as BoQ is expected to confirm this morning that institutions took out their full A$285 million entitlement under the bank’s A$450 million capital raising. This will see the bank push ahead with the retail leg of its capital raising.
BoQ launched the cash call after warning this week it would post a A$91 million first-half loss as a result of the sharp jump in the number of soured commercial and residential property loans, mostly around the Gold Coast and parts of northern NSW.
The bank was also forced to sharply top up provisioning to protect against the potential for a slowing economy.
While it has delivered fast-paced growth for BOQ over the past decade, the model pioneered by former chief executive David Liddy has its detractors, and has led to legal action from several disgruntled former franchisees who claim the business is heavily skewed in BOQ’s favour.