Sat, Oct 12, 2013 - Page 15 News List

Westpac agrees to buy Lloyds’ A$1.45bn assets

‘STRATEGIC SENSE’:Westpac’s share price rose 2.45 percent to close at A$32.99, and is forecast to deliver an extra A$100m in cash earnings by 2015

AFP, SYDNEY

Banking giant Westpac yesterday said it has agreed to buy Lloyds Banking Group’s Australian businesses for A$1.45 billion (US$1.37 billion), the Australian lender’s largest acquisition in five years.

Under the deal, the country’s second biggest bank by market capitalization will acquire Capital Finance Australia Ltd (CFAL) and corporate loan portfolio BOS International Australia Ltd by Dec. 31.

BILLION-DOLLAR BUY

CFAL has a motor vehicle finance book of A$3.9 billion, an equipment finance book of A$2.9 billion, and a corporate loan portfolio of A$1.6 billion.

News of the deal sent Westpac’s share price surging 2.45 percent to close at A$32.99.

“This is a value creating, straightforward transaction that makes both commercial and strategic sense,” Westpac chief executive Gail Kelly said in a release to the Australian Stock Exchange.

“These are strongly performing businesses that we know well and that will expand our reach and capability in target segments,” Kelly added.

SECOND-BIGGEST BUY

The transaction, Westpac’s largest since it paid A$12.6 billion for St. George Bank in 2008, is expected to deliver approximately A$100 million in additional cash earnings by the 2015 financial year.

The troubled Lloyds group, which is exiting the Australian market, is off-loading assets considered noncore to cut costs after a British government bailout in 2008 with A$20 billion of taxpayers’ cash.

Westpac said the deal was not subject to regulatory approvals, but it had notified the consumer watchdog, the Australian Competition and Consumer Commission, and was cooperating with its informal merger review process.

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