Commonwealth Bank of Australia (CBA) said on Tuesday it has started exclusive talks with British bank HBOS about a potential take-over of BankWest, HBOS' Australian operation, estimated to be worth A$2 billion ($1.45 billion). Earlier press reports had said CBA was looking to bid around A$2 billion ($1.45 billion) for BankWest, though neither parties were willing to comment on the likely size of a deal.
Like many other lenders around the world hit by the global credit crisis, British banks are scrambling to raise funds to shore up ailing balance sheets. HBOS has accepted a take-over bid from rival Lloyds TSB Group Plc.
Consolidation in Australia's banking sector has been widely expected as its big four players bulk up to weather the financial market turmoil. Westpac Banking Corp, Australia's fourth-biggest bank, is close to acquiring the No 5 bank St George, while Suncorp-Metway Ltd said on Monday it had received several approaches for its banking unit.
"It's an opportunity which gives them a slightly larger footprint...it obviously strengthens Commonwealth's position in the west," said Angus Gluskie, portfolio manager at White Funds Management. "What's opening up here is an opportunity for another round of consolidation. Obviously St George Bank is one, the move on BankWest is another and the potential for a Suncorp move is a third.
"It's a process that people have talked about for many years, but the opportunities have only just arisen in this challenging market," Gluskie said. He pointed to a handful of smaller regional banks which could also be on the list, such as Bank of Queensland and Bendigo and Adelaide Bank.
CBA, Australia's second-largest bank, said no agreement had yet been reached on a deal, and earlier in the day refused to comment on a report in the Australian Financial Review newspaper that it was close to announcing a take-over worth A$2 billion.
HBOS Australia consists of BankWest Retail, BankWest Business, insurance and wealth management company St. Andrew's, corporate lending division BOS International, and asset finance company Capital Finance. A source close to the deal said talks with CBA did not include BOS International and Capital Finance, as the group wished to hold on to the two divisions.
Comments
Comments are closed.