Australian banking group Westpac has agreed to sell its vendor finance business to Angle Finance, owned by US-based private equity firm Cerberus Capital Management.

Financial terms of the deal were not divulged.

The acquirer will pay an initial consideration upon deal closing and a deferred amount over two years after closing.

Under the agreement, Angle Finance will acquire the Westpac unit’s customer loan book worth around A$500m ($359.80m).

The sale is part of the lender’s strategy to cut its portfolio of underperforming businesses and focus on its core banking operations.

Westpac CEO of specialist businesses Jason Yetton said: “The sale represents the first transaction of the Group’s simplification initiatives and brings certainty for Vendor Finance customers and new opportunities for our people.”

The bank said that the deal will have a “negligible” impact on its balance sheet and capital ratios. It expects a minor accounting loss on the sale.

The transaction is expected to close by the end of April next year.

Westpac’s vendor finance business enables third parties to fund small-scale equipment finance loans to nearly 42,000 businesses in Australia.

At present, the vendor finance unit operates out of Westpac arm Capital Finance Australia (CFAL).

Post-sale, Westpac will continue to operate the remaining CFAL Equipment Finance business.

Earlier this month, Westpac slashed contactless payment fees for merchant customers.

Last month, Westpac decided to bring back 1,000 call center jobs to Australia due to Covid-19.

In the same month, the bank provided updated transaction details to AUSTRAC over incomplete information scrutiny.