Westpac gets out of car financing, sells loan book to US-based company

Rebecca Le MayNCA NewsWire
Camera IconNot Supplied Credit: News Corp Australia

Westpac is getting out of car loans as it steps up its push to simplify the business and become more profitable.

The major bank announced on Monday it would sell its motor vehicle dealer finance and novated leasing businesses to New York-based Cerberus Capital Management’s Angle Finance.

Under the deal, Westpac will offload about $1bn worth of auto dealer and introducer agreements, together with wholesale dealer loans.

The bank will hold on to about $10bn worth of existing retail auto loans, which will run down over the life of the loans.

Westpac customers will still able to use its consumer and business lending products to help buy cars.

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“This sale brings certainty for our customers, new opportunities for our people and continues the progress we are making on becoming a simpler bank,” Westpac chief executive of specialist businesses and group strategy Jason Yetton said.

“Angle Auto Finance is committed to the auto finance industry and will provide the capability and strategic focus to grow and improve the business.”

Pending regulatory approvals, the deal is expected to be complete by the end of this calendar year.

Westpac’s simplification plan aims to improve efficiencies by stripping back the group’s operating model.

The program is heavily skewed towards improving its digital capabilities and the bank has also already announced the sales of its general insurance, lenders mortgage insurance and Pacific businesses.

Citi analysts said in a research note on Monday that Westpac was their top pick in the banking sector, noting its had about $7bn worth of potential divestments to come, saying it “punches above its weight in terms of its share of excess sector capital”.

“Progress on productivity initiatives may offer upside to earnings forecasts,” Citi said.

Originally published as Westpac gets out of car financing, sells loan book to US-based company

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