Merger Talks Between Westpac and St George

Submitted by Craig Strzelecki on 13 May, 2008 - 09:54

Merger of two big financial institutions of Australia – Westpac Banking Corporation and St George is likely to be announced today. Westpac revealed yesterday that it is in talks with St George for a possible merger between the two.

If the deal goes through, it would be one of the biggest banking deals that would form AU$ 64 billion worth institution in Australia. The deal is expected to create one of the biggest banks in Australia in terms of share market value. The new merger shall replace Commonwealth Bank of Australia as the biggest bank of Australia. It shall have a customer base of 10 million customers which would nearly half the population of the whole country. It would also be Australia’s biggest mortgage lender with 25% market share and shall be country’s biggest wealth manager controlling $108 billion worth of funds.

Gaily Kelly, who joined Westpac from St. George less than four months ago, announced that none of the bank’s 800 plus branches and 400 plus branches of St George would close. This merger would also mean that now customers would be the greatest beneficiaries as they might be banking seven days a week with “super branches” mushrooming in shopping complexes. On the darker side, it could also mean that customers would have lesser choices to choose for cheaper interest rates for their bank loans. The Australian Consumer’s Association is currently keeping quiet on the whole issue.

The announcement has triggered furious trading of shares in the banking sector. Shares in National Australia Bank, ANZ, Commonwealth bank, all witnessed a rise in their trading values. Traders are speculating that the long held ban on mergers of nation’s four big lenders could topple. St George falls outside the Four Pillar ban which prohibits merger of four major banks of Australia. The merger still needs to get a green signal from Australian Competition and Consumer Commission. Speculations about take over or mergers of regional banks, like Queensland-based Suncorp, Bendigo and Adelaide Bank in Victoria and Bank of Queensland, were also doing rounds in the market that they would be the next targets.