Sydney - Westpac Banking Corporation, one of Australia's Big Four high street banks, has proposed a merger with fifth-placed St George Bank that would create Australia's largest financial services company. The banks placed their shares in a trading halt Monday and expect to make an announcement Tuesday.
"This (merger) would lower risk and costs for St George, and position the combined business to withstand challenging funding markets and take advantage of opportunities created by the dislocation in capital markets," Westpac chief executive Gail Kelly 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."
Christopher Zinn, the spokesman for consumer lobby group Choice, warned that the takeover would curb competition.
"We don't believe there's enough competition in the banking sector as it is, and any contraction in the number of banks, especially in terms of the big five banks, is not necessarily going to lead to any more competition," Zinn said.
Australian Shareholders Association spokesman Stuart Wilson said a merger made good business sense because St George shares were underperforming and Westpac was on a high because it had escaped much of the credit-crisis fall out.
"I think that Gail Kelly being the former CEO of St George will mean that there's not going to be any skeletons in the closet that she doesn't know about," he said. "Where you have got two companies that were competitors, bringing them together is very difficult and she is certainly the right person for the job there."
South African-born Kelly, who left the top job at St George to take charge at Westpac only three months ago, is the first woman to head an Australian bank and the only woman in charge at a top-20 listed company.
Kelly, 52, is the second South African to lead a top 20 Australian company, following the elevation of Marius Kloppers to chief executive of giant miner BHP Billiton in May.
Kelly, a former history teacher, arrived in Australia in 1997 and was appointed managing director of St George in 2002.
"I have got lots of energy," Kelly said in a recent magazine interview. "I don't waste time. I move. I finish things. I don't try and do things to the nth degree. I now what's important and what's not."
The government has banned mergers among the four major banks: Westpac, National Australia Bank, ANZ Banking Corporation and Commonwealth Bank.
