Westpac seeks to merge with St George

by Richard Kilner

Story link: Westpac seeks to merge with St George

Today Westpac Banking has confirmed that it is presently engaged in discussions with St George Bank, with a view to achieving an all-share bid.

Should the deal go ahead it would lead to the creation of Australia’s largest home lender, with a market share of 25% and 10 million customers.

Australia’s banking sector has, like the rest of the world, been negatively affected by the credit crunch, which has caused borrowing costs to rise and led to banks passing on the increasing costs onto their customers.

St George has had some difficulties with the cost of funding, leading some to consider the Westpac move opportunistic.

However, some consumer groups have raised concerns that a merger would be detrimental to competitiveness.

It is necessary for a green light to be given from the Federal Government, in addition to approval from the industry regulator.

The deal has been tentatively welcomed by Kevin Foley, the treasurer of South Australia.

Although Foley has promised to look over the small print in detail, at this stage he believes that the deal would be good for South Australia.