In morning trade the Bank of Queensland Limited (ASX: BOQ) share price has followed the market into the red.
At the time of writing the regional bank's shares are down over 1.5% to $9.58.
Why is the Bank of Queensland share price in the red?
As well as being caught up in general banking sector weakness which has seen the likes of Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) fall 3% this morning, Bank of Queensland had some news of its own.
According to the bank, the agreement to sell its St Andrew's Insurance business to Freedom Insurance Group (ASX: FIG) has been terminated.
Management advised that the decision to terminate the sale was mutually agreed with Freedom after it became apparent that the conditions of the transaction would not be satisfied within the time limits contained in the sale agreement.
Following the termination of the agreement with Freedom, Bank of Queensland will continue to assess its strategic options in relation to insurance business.
But in the meantime, management notes that the St Andrew's business continues to be a strongly capitalised business which is focused on delivering for its customers and corporate partners.
What now?
I don't think this news will come as a huge surprise to the market given how hard Freedom Insurance has been hit since its appearance at the Royal Commission.
And while selling the business to Freedom would have been a good move and was expected to positively impact the bank's common equity tier 1 ratio by ~20 basis points, I suspect that other suitors may come knocking in the future if the business continues to perform well.
Should you invest?
I think Bank of Queensland has a solid business, but for valuation reasons I would pick Australia and New Zealand Banking Group (ASX: ANZ) or Westpac shares ahead of it. Especially after the pullback in their respective share prices today.
