Westpac sells vendor finance business to focus on core banking

(Reuters) – Australia’s Westpac Banking Corp on Friday agreed to sell its vendor finance business to a U.S. private equity firm, as part of its strategy to focus on core banking operations and trim its portfolio of underperforming businesses.

The unit, which supports third parties to fund small-scale equipment finance loans, would be sold to Angle Finance, a portfolio company of Cerberus Capital Management, Westpac said.

Westpac did not specify the deal value, but said it expects a small accounting loss on the sale and negligible impact on the bank’s balance sheet and capital ratios.

The deal will result in the transfer of about A$500 million ($359.80 million) worth of Westpac’s customer loans, and is expected to be completed by the end of April 2021.

In May, the Australian bank kicked off a review of its underperforming divisions including wealth platforms, superannuation and retirement products, insurance and auto finance businesses.

Westpac’s vow to create a leaner, more banking-focused business came after it scrapped a dividend payout and posted a plunge in first-half earnings, hit by steep costs from a money laundering scandal and a surge in charges for bad loan provisions due to the coronavirus outbreak.

(Reporting by Rashmi Ashok in Bengaluru; Editing by Shinjini Ganguli and Shounak Dasgupta)