Analysis of Bank of Queensland and the Financial Environment of the Industry

Running Head: Principles of Financial Management
Principles of Financial Management
University Name
Student Name

Principles of Financial Management
Contents
1) Analysis of Bank of Queensland and the financial environment of the industry.................1
1.1. Industry Description................................................................................................................2
1.1.1. Size of the industry and level of competition................................................................2
1.1.2. Industry Regulators..........................................................................................................2
1.1.3. Industry groups that help regulate behaviour in the banking industry......................3
1.2. Bank of Queensland: Company Description........................................................................3
1.2.1. Bank of Queensland business........................................................................................3
1.2.2. Organisation structure of BOQ.......................................................................................3
1.2.3. Role of BOQ within a financial system..........................................................................4
1.3. Financial Instrument Analysis................................................................................................5
1.3.1. Financial Instruments that BOQ deals in:.....................................................................5
1.3.2. OFF Balance Sheet business.........................................................................................5
1.4. Analysis of Bank of Queensland...........................................................................................6
1.4.1. Analysis of Internal Factors............................................................................................6
1.4.2. Analysis of external Factors...........................................................................................7
1.5. Financial Market Analysis......................................................................................................8
1.5.1. Interaction between different financial players in the banking industry....................8
1.5.2. Government/Regulators Intervention............................................................................8
1.5.3. Unethical practices by BOQ in the past........................................................................9
2) Conclusions and Recommendations......................................................................................10
3) References.................................................................................................................................12
4) Appendices................................................................................................................................15

Principles of Financial Management
1) Analysis of Bank of Queensland and the financial
environment of the industry
1.1. Industry Description
1.1.1. Size of the industry and level of competition.
Bank of Queensland fall under the financial sector and its industry group is banks
and its industry is also banks (ASX, n.d.).
Australia’s financial services industry is very strong and well established. The
contribution of this sector to the national GDP is significant and the financial industry
has been a major force behind the growth of the Australia’s economy (The Treasury
Australian Government, n.d.).
Banks account for the biggest part of the financial sector in Australia and it holds
approximately 50% of the financial sector’s total assets (Royal Commission, 2018).
According to the Australian Banking Association (2019), total assets held by the
banking industry are $3.9 trillion, total liabilities are $3.6 trillion and shareholder’s
equity is $267 billion.
Australia’s banking industry is very concentrated as “the big four” banks: Westpac,
Commonwealth Bank, National Australia Bank and Australia and New Zealand
Banking group completely dominate the banking sector of Australia. These large
banks have combined assets of $3.6 trillion, which accounts for more than 90% of
the total assets held by the banking industry (Janda, 2019).
1.1.2. Industry Regulators.
Leading regulators of the banking industry in Australia are (Paterson, King and
Mallesons, 2018):
Australian Prudential Regulation Authority (APRA)- It was established in 1998 and
the regulator supervises the whole industry and it is responsible for the prudential
regulation of banking sector.
Australian Securities and Investments Commission (ASIC)- It was established in
2001 and it is responsible for market conduct. ASIC regulates this sector in an
effective manner to protect all the investors from misconducts and frauds.
Reserve Bank of Australia (RBA)- The RBA oversees all the banks. It is responsible
for Australia’s monetary policy and the national financial system.

Principles of Financial Management
The banking regulators have the power to ensure compliance but they were reluctant
in enforcing the regulations on the major banks. These regulators were heavily
criticised in the Royal Commission report as the regulators worked in a close manner
to the banking system and shown reluctance to act on misbehaviours of major banks
(Danckert, 2018).
1.1.3. Industry groups that help regulate behaviour in the banking industry.
Australian banking association is an industry group having the participation of 23 of
the main Australian banks. This association works with the regulators, government
and other stakeholders to help regulate the behaviour in this industry to ensure the
banking customers benefit from the stable and competitive financial system
(Australian Banking Association, n.d.).
1.2. Bank of Queensland: Company Description
1.2.1. Bank of Queensland business
BOQ is a well-established regional bank in Australia. The bank offers a variety of
financial products and services to retail and business customers. To offer these
services the bank operates under various brands (Bank of Queensland, n.d.):
Virgin Money Australia: It provides different type of easy to understand and great
value financial products to the customers.
BOQ Finance: This subsidiary of BOQ is a mid-market financier which specialises in
asset, cash flow and structured finance solutions.
BOQ Specialist: It provides customised banking solutions to specialized segments of
market like medical, veterinary, dental and accounting professionals.
St Andrew’s Insurance: It provides variety of insurance products to customers and
corporate partners.
1.2.2. Organisation structure of BOQ
Ownership structure:
According to Simply Wall St (2019):
Institutional investors own 19% of BOQ.
Insiders own 1% of BOQ.
Retail investors own 80% of BOQ.