Bank of Queensland Ltd. (BKQNY,BOQ.AX) announced Tuesday a strategic capital partnership with Challenger Ltd. (CFIGF,CGF.AX), aiming to transform to a simpler, specialist bank.
In Australia, Bank of Queensland shares gained 6.9 percent, to close on Tuesday at A$7.27. Challenger shares lost 2.2 percent and closed at A$8.08.
The partnership with Challenger includes a A$3.7 billion whole-of-loan sale and a forward flow arrangement for equipment finance assets. Tthe deal is expected to further optimise BOQ's funding base and support the acceleration of its ambition to service more equipment finance customers, particularly in the small to medium business sector.
BOQ said the partnership will support the optimisation of its balance sheet and cost of funding while enabling the bank to grow capital-light revenue streams to improve Return on Equity (ROE) and enhance shareholder returns.
The latest deal follows BOQ's August 2025 announcement that a whole-of-loan sale process was being explored.
The transaction is expected to complete by the end of May 2026.
The company noted that capital will be returned to shareholders, subject to market conditions, board and regulatory approvals, through an on-market buyback of shares and a fully franked special dividend, with final timing and amounts expected to be confirmed at completion.
BOQ Managing Director & CEO, Rod Finch, said, "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. Our ability to return capital to shareholders demonstrates the strength of BOQ's balance sheet."
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