BOQ Faces $200m Dispute Over Branch Buybacks

Bank of Queensland’s plan to fully corporatise its branch network aims to simplify operations and drive growth, but it’s sparked a major legal battle with former branch owners seeking as much as $200 million more in compensation. The group, which includes up to 70 disgruntled owners, argues the bank’s buyback prices significantly undervalue their stores.

The issue arose after BOQ moved to transition all 114 of its franchise branches into company-managed outlets as part of a broader business model overhaul. This decision effectively ended a 2-decade long revenue sharing arrangement that had been in place since 2002. The acquisitions were completed by March, with BOQ allocating between $115 million and $125 million for these transactions.

However, former branch owners now claim their stores are worth far more than what BOQ paid—seeking an additional $125 million to $200 million. Legal and financial advisors are supporting the group as talks with the bank continue. Internally, BOQ says its strategy aligns with changing customer preferences and long-term operational goals. Despite the ongoing dispute, the bank has assured there’s no disruption to its branch network, and all 570 employees from the acquired sites have been onboarded.

This disagreement puts added pressure on BOQ ahead of its interim financial results, which are expected to show a cash profit of roughly $165.9 million for the half-year ended February. Analysts suggest the bank’s future profitability hinges on improved lending margins and increased efficiency via digital upgrades. But with non-major lenders already feeling the squeeze from higher funding costs, BOQ’s friction with former partners adds another layer of risk.

Source: Australian Financial Review, Grafa