Bank of Queensland to cut about 400 jobs in restructuring drive

By Sherin Sunny

(Reuters) -Bank of Queensland will cut up to 400 jobs and convert all 114 owner-managed branch networks into its corporate structure by next March as part of a broad restructuring programme, the Australian lender said on Thursday.

The Brisbane-based lender expects to incur charges of A$115 million to A$125 million ($77.41 million-$84.14 million) to convert the branch networks over the next four years.

Shares of the firm fell as much as 3.7% to A$6.19.

The bank estimated a restructuring charge of A$25 million to A$35 million post tax for job cuts, which is likely to impact its fiscal year 2024 statutory net profit after tax. Although the company did not disclose the potential extent of the impact.

The job-cut initiative will deliver annual savings of around A$50 million over the next couple of years, Bank of Queensland said.

"Despite targeting productivity savings equivalent to ~25% of the cost base while taking out 400 of 3,100 FTEs, the path to an ROE of 8% looks very difficult and with significant execution risk in the business," analysts at Citi said in a note.

The bank restated its full-year 2026 return-on-equity (ROE) target to 8% from a previous estimate of 9.25%, to include the impact of industry-wide challenges and elevated cost inflation.

The management said 10 specialist bankers will join in the second half of 2024, targeting opportunities in sectors including agriculture, health and professional services. This comes as a part of the bank's investment to accelerate growth in business banking roles.

"Our heritage retail banking operating model, that has served us well in the past, is no longer sustainable in its current state in a lower returning environment," Managing Director and CEO Patrick Allaway said.

($1 = 1.4857 Australian dollars)

Source: Investing.com