After careful consideration, today I am announcing approval, with conditions, of the proposed acquisition of St George Bank Limited by the Westpac Banking Corporation under the Financial Sector (Shareholdings) Act 1998.
This decision follows a thorough assessment of its impact on the national interest, including factors such as competition, economic efficiency, prudential requirements, financial system stability, community banking needs and the impact on Westpac and St George customers and employees.
With the conditions I am imposing, this decision strikes the right balance between enhancing the competitiveness and the strength of our banking system.
This decision takes careful account of the detailed assessments of the Australian Competition and Consumer Commission (ACCC), the Australian Prudential Regulation Authority (APRA) and the Department of the Treasury.
The merged entity will have a larger balance sheet and capital base, as well as broader access to funding markets, making it better placed to withstand systemic shocks. The St George banking brand will also benefit from Westpac’s lower funding costs, helping it to offer lower interest rates on loans.
As part of the approval, I am imposing strict conditions on the acquisition to ensure the best possible outcome for both Westpac and St George customers and employees.
Under the conditions, Westpac is required to maintain the existing number of Westpac and St George branches and ATMs, including in non-urban areas; retain all Westpac and St George retail banking brands including Bank SA, maintain dedicated management teams for St George and Westpac retail banking distribution and retain a corporate presence in Kogarah. The conditions will also require the removal of foreign ATM fees for Westpac customers using St George ATMs and vice‑versa.
Approval of the proposed acquisition under the Financial Sector (Shareholdings) Act 1998 will also be conditional upon the agreement of the shareholders of St George Bank to the proposal and the endorsement of the relevant scheme of arrangement.
I am also providing my approval under the Banking Act 1959 for St George to enter into an arrangement for the disposal of its business to Westpac.
23 October 2008
The conditions to which this approval is subject are that, for a period of three years after the implementation of the proposed merger, the merged entity is required to:
In addition, for the period of integration under the merger process (the period between the Share Scheme Implementation Date and the merger of the ADIs), the merged entity is required to:
Westpac Banking Corporation will not be liable for any failure to perform any obligation imposed by these conditions if the failure is due to Force Majeure.
If Westpac Banking Corporation is by reason of Force Majeure unable to perform an obligation under these conditions, Westpac Banking Corporation will as soon as practicable and in any event within 30 days notify the Treasurer specifying:
and will use all reasonable diligence and employ all reasonable means to remedy or abate the Force Majeure as expeditiously as possible.
Force Majeure means:
Westpac Banking Corporation will give written notice to the Treasurer of the following matters as soon as practicable and in any event within 30 days after the relevant occurrence:
This approval remains in force indefinitely.