Westpac Saves 10% in St George Merger

Westpac Banking Corporation (WBC), a multinational financial service company, is expected to save $400 million by 2011 as a result of acquiring St George Bank (SGB). The bank estimated that it would gain $365 million in the next three years due to 20-25% of cost reduction and this figure has been upgraded because of the takeover. It is also expected that, about 2000 staffs will be sacked in this merge.

The banking company has announced that the group executives will be reduced from 18 to 12 and general managers from 144 to 87. A huge cut has been taken place by reducing the number of Westpac senior executives from 789 to 434. In a slide presentation the bank said that the merger integration was "proceeding well" and "on track to deliver significant benefits to customers and shareholders".

Phil Coffey, CFO of Westpac said that the final purchase price valued St George at $12.2 billion. "It's certainly been an eventful six months from the time of the announcement of the merger to the final acquisition” he said. Now that the deal was completed, Westpac was well capitalised after the bond issuance and institutional placement was carried out. He added that "We are in good shape to deal with the procyclicalities and the opportunities of the 2009 economic and business cycle”, “Two weeks into the merger and we are making good progress in fair valuing the St George balance sheet”.

WBC said; St George cost base had been reduced after the announcement of merger. The SGB’s chief transformation officer Brad Cooper said the job slices that had occurred so far did not result in all of the affected staff leaving the bank. The investors shifted to take up the shares of Commonwealth Bank of Australia so the Westpac share price fell nearly 5 per cent yesterday.