Westpac Withdraws From Auto Finance, Sells Portfolio Of Loans To US-Based Company
Westpac is pulling out of auto loans as it steps up efforts to simplify the business and become more profitable.
The big bank said on Monday it would sell its auto dealer finance and leasing business to Angle Finance of New York-based Cerberus Capital Management.
As part of the deal, Westpac will offload approximately $ 1 billion in auto dealer and introducer deals, as well as wholesale loans.
The bank will hold about $ 10 billion in existing retail auto loans, which will run out over the life of the loans.
Westpac customers will still be able to use its consumer and business loan products to purchase cars.
“This sale brings certainty for our customers, new opportunities for our employees and continues the progress we are making to become a leaner bank,” said Jason Yetton, general manager of corporate activities and group strategy at Westpac.
“Angle Auto Finance is committed to the auto finance industry and will provide the capacity and strategic direction to grow and improve the business.”
Pending regulatory approvals, the deal is expected to be finalized by the end of this calendar year.
Westpac’s simplification plan aims to improve efficiency by stripping down the group’s operating model.
The program has a strong focus on enhancing its digital capabilities and the bank has also already announced the sale of its general insurance, lender mortgage insurance and Pacific businesses.
Citi analysts on Monday said in a research note that Westpac was their top choice in the banking industry, noting that it had around $ 7 billion in potential divestitures ahead, saying it “exceeds its weight in terms of sector’s share of excess capital “. .
“Advances in productivity initiatives can provide a benefit to earnings forecasts,” Citi said.