Regional lender Bank of Queensland, which this week unveiled a surprise first-half loss and a deeply discounted capital raising, says it will discuss its commission structure with its hundreds of owner-managers.
In an announcement to the ASX this week, BoQ said it would refine its “OMB model structure and incentives”, in a bid to create a “more disciplined and focused organisation.”
It also said it was looking at “making adjustments to incentives to reward appropriate risk behaviour.”
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A company spokeswoman this morning rejected reports that commission cuts were under consideration, saying the bank will be working with owner-managers to review the structure and ensure it is still “relevant.”
“It’s actually a comment about improving the structure, not cutting commissions.”
The bank later said the commission structure is “complex”, and left open the prospect of commission cuts.
“As the normal part of the review to improve the OMB model, some commissions may go up and some might go down.”
According to The Age, the move could affect BoQ branches in New South Wales and Victoria, where the bank has grown considerably over the past 10 years.
Comments were sought by OMBs this morning, with most declining or unavailable.
BoQ has hundreds of OMBs across the country, in addition to about 50 corporate-owned branches. Under the system, the owner-operators pay to set up the branches and are responsible for hiring, and are incentivised for increases in loans and deposits.
According to the 137-year-old bank, the owner-managers “live locally, know their customers well and are willing to go the extra mile to ensure that our customers always receive personal service.”
Nomura analyst Victor German said although it was difficult to predict how changes to the OMB model would boost BoQ’s bottom line, it could be a “reasonable” saving for the bank.
German noted that at a presentation this week, the bank said it would continue to support the OMB model, with a strategic review at a later date.
BoQ this morning said it had completed the institutional component of its $450 million equity. It announced a $91 million half-year loss earlier this week, driven by bad debts and a desire to boost capital ahead of new global banking rules.