BOQ Announces 400 Job Cuts And Franchise Merger Amid Cost-Cutting Measures

In a bid to cut down cost pressures, the Bank of Queensland (BOQ) has announced axing 400 full-time roles and merging the 114 franchise networks into its corporate structure by March 2025.

Australia's regional lender will spend AU$115 million to AU$125 million in its efforts to convert the branches, according to Reuters. In addition, the bank is also expecting a post-tax restructuring charge of AU$25-35 million for job cuts, which is expected to affect its after tax statutory net profit for the fiscal year 2024.

Following the announcement, BOQ's shares dropped by 6.1% to AU$6.03, their lowest since early August.

Last year, the bank slashed 250 jobs; however, it hired 10 bankers in the last six months to expand its business team.

"The bank needs to come clean on their plan as workers deserve better than death by a thousand cuts," Finance Sector Union national secretary Julia Angrisano said. "Workers are walking around feeling that they have a target on their backs, waiting for the axe to fall on them."

BOQ's chief executive Patrick Allaway said the bank's franchise model was no longer sustainable, and that the decision to cut jobs was "difficult but necessary," Australian Financial Review reported.

"The current operating model and structure is not sustainable for us," Allaway said. "Our customers are moving to digital channels ... but we have also seen very significant margin compression," he said. "The sustainability of the model, if margins don't recover, is very questionable."

The franchise networks were profitable in the "rivers of gold" age of the early-to-late 2000s, Allaway said. But, "in a low-returning market," this was "a high cost-to-serve channel for us," he added.

The regional and mid-market banks in the country have been struggling under the dual pressures of the intense mortgage market coupled and rising technology costs.

The bank's plan to reduce the staff, which was announced in April, is expected to help it save AU$50 million a year by the 2026 financial year.

Asked if BOQ was creating more competition by forcing out franchisees, who might transition to mortgage broking, Allaway said: "We are offering employment opportunities to our owner-managers and employees in that group, and we believe many will convert."