Possible merger between Westpac & St George

Look at the news below (obtained from NineMSN).

Westpac (one of Australia's biggest 4 banks) & St George (Australia's fifth largest bank) have had merger talks this morning. According to another source, should the merger go ahead, the new entity would actually be Australia's largest bank. Know what the interesting thing is? Gail Kelly, the Westpac CEO, used to be the St George CEO. But she left St George last year, to work for Westpac. And now look, she & her bank are returning to her old bank to absorb it.

Now, the banking regulations in Australia (it's called the "four pillars rule") prevent Australia's biggest 4 banks (CBA, NAB, ANZ, Westpac - not sure the order of size) from merging with each other. Since St George is not part of that top 4, the proposed merger will not fall foul of the "four pillars rule" but obviously there will be other regulatory "hurdles" which must be cleared before the merger can go ahead. But looks as if we have a case of a member of the top 4 banks taking out a major competitor to the top 4. Perhaps Westpac see this takeover as a way of expanding to challenge the other 3 members of the top 4.

At least the St George brand will stay (or at least that is the plan at this stage, anyway). I have an interest in this news because I am a St George customer. I've been largely satisfied with St George thus far. I don't know what Westpac are like. Maybe they're not too bad. But if the merger goes ahead, how will things change? The talk is that of a bigger & better organisation, & while it will certainly be bigger, will it be better? Hopefully the level of customer service at least stays the same, if not improve. What I look forward to see is the range of new products that will be released by the newly merged entity. What new products will the new entity offer to customers? New savings accounts with high interest rates & Nil fees? New investment products? If the merger eventuates, all I got to say to the new entity is: show us what u got!


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Westpac, St George in merger talks
10:00 AEST Mon May 12 2008

Two of Australia’s biggest banks have kicked off merger talks after Westpac approached St George about a proposed takeover of its operations.

St George told the Australian stock exchange today that Westpac had approached it after close of business on Friday.

Both banks this morning asked for trading halts in their shares to allow confidential discussions to continue and for an announcement to be made, possibly within 24 hours.

In a statement, Westpac said the respective brands would be better able to compete and flourish by belonging to the same larger, stronger entity.

"Both organisations are strong businesses, with iconic brands, strong and highly complementary cultures and long track records of delivering for customers, employees, shareholders and the community," it said.

Under the potential merger, all Westpac and St George brands, including Bank SA, and branch/ATM networks would be retained.

"The focus will be on investing more in front-line services," Westpac said.

Westpac chief executive Gail Kelly said the merger was a unique opportunity to bring the brands together in a way that would benefit both banks and their customers.

"It would create Australia's leading financial institution with regard to meeting customer needs, distribution, strong brands, scale, financial strength and the best products," she said.

"For customers, it would make it more convenient to access customer touchpoints, including the largest distribution network with over 1,200 branches and in-stores as well as more than 2,700 ATMs.

"It would also provide greater diversity and choice of products from both organisations."