labels: M&A
Australia's No 2 bank Commonwealth may buy BankWest for $5.2 billion news
18 August 2008

Another major banking acquisition may be in on the cards although the supposed buyer has dismissed news reports as ''only speculation''. Commonwealth Bank of Australia (CBA), the country's No. 2 bank by assets, did not  comment on reports that it may offer over A$6 billion ($5.2 billion) to British bank HBOS Plc for its Australian unit BankWest.

HBOS, Britain's biggest mortgage-lender, has appointed Morgan Stanley to advise on future options for the west Australian-based lender, which is worth A$5 billion to A$7 billion, a local newspaper said, citing banking sources.

The plan comes after CBA last week withdrew from acquisition discussions with Royal Bank of Scotland. Its bigger rival, National Australia Bank Ltd, had also ended similar takeover talks with the British bank late last month. (See: RBS fails to sell of Australian assets; faces multi-million pound lawsuit by hedge fund)

CBA Chief Executive Ralph Norris said in a television interview on Sunday that his bank would continue to look for acquisition opportunities.

"You always look at acquisitions and it's about how compelling the acquisition opportunity is. Certainly, we would look at all opportunities. We have done that in the past, and we will continue to do so in the future," Norris said.

However, bank spokesman Bryan Fitzgerald dismissed the latest reports on a possible BankWest acquisition as speculative. HBOS Australia spokesman Adam Connolly also declined comment.

Investors are pushing HBOS to sell £4.2 billion ($7.8 billion) of assets, including the Australian unit, after shareholders shunned a rights offering last month. Less than 9 per cent of investors exercised their right to buy shares, leaving the sale's underwriters with about £2.5 billion of unsold stock.

A purchase of BankWest may help Commonwealth Bank fend off a threat to its dominance of Australia's mortgage lending market. Westpac Banking Corp.'s A$16.9 billion merger with St. George Bank Ltd., which last week won regulatory approval, would create the nation's biggest mortgage provider, surpassing Commonwealth Bank.

National Australia, the nation's largest bank by assets, may bid for HBOS's Australian unit. Although National Australia didn't approach HBOS, it has reportedly met with advisory firms in London.


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Australia's No 2 bank Commonwealth may buy BankWest for $5.2 billion