Australia Bank Mergers & Acquisitions (Westpac Banking)

Photo: A Westpac branch in Hay, New South Wales, Australia.

With special thanks to Giles Martin of New South Wales, Australia and of Ohio, United States of America, for allowing me to use his photo. You can see Mr. Martin's photostream via this link:
http://www.flickr.com/photos/75905404@N00/


Westpac Banking Corporation

Westpac Banking was born in 1817 when the Fifth Governor of New South Wales signed a charter to establish the Bank of New South Wales, Australia's very first bank. Between the year 1788 when the first fleet carrying British convicts arrived in Australia and 1817, the colony lacked a standardized monetary system. Rum, promissory notes, British treasury bills, foreign coins and bartering were all used to settle transactions. The unreliable and inefficient system often led to disputes, confusion and corruption. One of the main goals of the creation of the new bank was to establish a monetary system and provide basic banking services.

In 1821, just four years into its establishment, the Bank of New South Wales suffered a serious blow when it was discovered that its Chief Cashier had stolen half the bank's prescribed capital. But the bank survived the crisis and the subsequent Banking Crisis of the 1840s, during which many of the bank's competitors failed. In the 1850s, the Bank of New South Wales enjoyed exponential growth after gold was discovered in New South Wales and Victoria.

Thanks to its cautious management, the Bank of New South Wales survived the two World Wars, as well as the Great Depression of the 1930s. In 1982, the Bank of NSW merged with Victoria-based Commercial Bank of Australia (CBA) and became the country's biggest bank at the time. It also changed its name to Westpac Banking Corp.

Recent transaction(s):

• In 1995, Westpac bought Challenge Bank in Western Australia.
• In 1996, Westpac acquired Trust Bank New Zealand.
• In 1997, Westpac bought Bank of Melbourne.
• In 2008, Westpac Banking, the No. 3 bank in Australia, agreed to take over the No. 5 bank, St. George Bank Ltd. in an AUD $18.6-billion all-stock deal (USD $17.5-billion, Eur 11.31-billion). The enlarged Westpac will become the No. 2 bank in Australia. St. George Bank was founded in 1937 as St. George Cooperative Building Society and became a full-service bank in 1992. At the time of the takeover, St. George Bank operated more than 400 branches. Australia has a long-standing policy to prohibit its Big Four banks (ANZ Banking, National Australia, Westpac and Commonwealth Bank) to merge with each other. Westpac's purchase of the largest bank outside of the Big Four group raised some anti-competitive concerns in Australia, but it was approved without much of a challenge from the banking and competition authorities.

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Australia Bank Mergers & Acquisitions (Commonweath Bank of Australia)

Photo: The Commonwealth Bank Building in Sydney, Australia.

With special thanks to Jeffrey Lee of Sydney, who kindly gave me permission to use his photo here. You can see more of his photographs via this link: http://www.flickr.com/photos/jeffrey_lee/

Commonwealth Bank of Australia

The Commonwealth Bank of Australia (CBA) was established by the Australian government under legislation in 1911. The bank was fully backed by the Australian government, the sole bank in the country with such a federal government guarantee.

In 1920, the Commonwealth Bank gained even more power when the Note Issue Board was created under the bank to assume the responsibility to issue the Australian currency on behalf of the Federal Treasury. The Commonwealth thus gained the characteristics of both a central bank as well as a savings bank. During the Great Depression, the bank expanded greatly when it took over the State Savings Bank of Western Australia and State Savings Bank of New South Wales.

Between the 1900s and 1940s, national governments around the world gradually separated central banking functions (issuance of currency, control on interest rates, management of national debt, and regulation of the banking sector etc.) from commercial banking activities (savings, lending and cash transactions for the general public). The Commonwealth’s full government guarantee and its de facto central bank status gave it unfair advantages over other pure commercial banks. After much scrutiny and controversies, the Commonwealth Bank Act and the Reserve Bank Act were passed in 1959, resulting in the creation of The Reserve Bank of Australia, which took control of all central banking functions in 1960. The Commonwealth Bank was now purely a state-owned savings and loan bank.

In 1989, the Commonwealth acquired 75% of New Zealand's ASB Bank Ltd. An important milestone in Commonwealth's history happened in 1991 when the bank was re-structured as a public company and ceased to be part of the government in the form of a statutory authority. Between 1991 and 1996, the Australian government sold off its entire holdings in the Commonwealth to the public.

Recent transaction(s):

• In 1991, the Commonwealth Bank merged with the State Bank of Victoria.
• In 2000, the Commonwealth Bank acquired Colonial Ltd. (including the Colonial National Bank) for AUD $9.0-billion.
• In 2007, the Commonwealth bought Australia's No. 3 on-line stockbroker IWL Ltd. for AUD $373-million (USD $320-million).
• In 2008, CBA acquired Australia’s BankWest (Bank of Western Australia) and insurer and asset management firm St. Andrew’s Australia Pty. Ltd. from ailing Britain’s HBOS plc for AUD $2.1-billion (GBP 808-million, USD $1.4-billion) in cash. HBOS had been close to financial insolvency and had just agreed to a sale to rival Lloyds TSB Group weeks earlier. HBOS plc would also receive AUD $360-million from a return of excess capital in BankWest, raising the total sale proceeds to AUD $2.5-billion (GBP 963-million, USD $1.66-billion).
• In late 2008, CBA announced it would buy up to AUD $4-billion (USD $2.7-billion) of mortgage loans from a General Electric Co. unit called Wizard Mortgage Corp. The loan portfolio is 100% insured. General Electric’s Wizard already sold its brand and 160-branch network to Aussie Home Loans, a mortgage provider that is 33% owned by Commonwealth Bank. Terms of the transaction were not disclosed.
• In March 2010, CBA sold its St. Andrew's insurance division to the Bank of Queensland for an undisclosed amount. St. Andrew's had about 165,000 policyholders.
• In September, 2017, CBA sold its CommInsure Life and Sovereign to Hong Kong's AIA Group Ltd. for AUD $3.8-billion (USD $3.04-billion, HKD $23.53-billion). CommInsure Life and Sovereign provides life insurance in Australia and New Zealand, and health insurance in New Zealand but had been mired in scandals of defrauding clients.
• In May 2018, CBA sold its 37.5% stake in BoComm Life Insurance to Japan's Mitsui Sumitomo Insurance Co. for CNY 3.2-billion (AUD $668-million, USD $503-million). China's Bank of Communications continued to hold the other 62.5% stake in the Chinese insurer.
• In June 2018, CBA announced that it would fully demerge (spin off and float) its wealth management and mortgage brokering business into an independent business to focus on banking business in Australia and New Zealand. The spin-off would be known as CFS Group and would consist of mainly Colonial First State (with AUD $135-billion of retirement solutions product funds under administration), Colonial First State Global Asset Management (with AUD $207-billion of client assets) and Aussie Home Loans, a mortgage broker. CBA shareholders would receive shares of the new CFS Group and CBA and CFS Group would sever ownership and management ties following the demerger. CBA and other Australian banks had been found guilty of multiple unethical and illegal business misconducts during the 2000s and have been required to compensate clients and change their business practice. The CFS Group demerger is part of the plan to simplify the operations and complexity of CBA.

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Australia Bank Mergers & Acquisitions (National Australia Bank)

Photo: A National Australia Bank branch in Blayney, New South Wales.

With special thanks to Giles Martin for allowing me to use his photo. You may see more of his photos via this link:

http://www.flickr.com/photos/75905404@N00/


National Australia Bank Group

National Bank of Australasia was founded in 1858 but it failed in the 1893 Banking Crisis when the Australian real estate bubble burst. Later in the same year, the bank re-emerged as National Australia Bank Ltd. Today, the initials NAB are commonly used.

In 1987, National Australia Bank purchased Scotland's Clydesdale Bank (founded in 1838) and Belfast-based Northern Bank (founded in 1809, with operations in both Northern Ireland and the Republic of Ireland) from Britain's Midland Bank. The price paid for Clydesdale was GBP 420-million, whereas the price for Northern Bank was only a symbolic AUD $2. Clydesdale Bank is one of the three banks authorised to issue Pound Sterling banknotes in Scotland, whereas Northern Bank is one of the four authorised to issue Pound Sterling banknotes in Northern Ireland.

In 1990, National Australia purchased England's Yorkshire Bank (founded in 1859) for GBP 976-million, and this was followed by the acquisition of the Bank of New Zealand (founded in 1861) in 1992. 

During the mid-1990s, National Australia bravely decided to expand into the competitive and complicated U.S. market: first buying Michigan National Corp. for USD $1.56-billion in 1995, then Florida-based mortgage lender HomeSide Inc. for USD $1.23-billion.

Recent transaction(s):

• In 2001, National Australia sold Michigan National Bank in the U.S. to ABN AMRO Holding NV for USD $2.75-billion.
• Later in 2001, NAB sold its American mortgage lender HomeSide's operating platform and assets to Seattle-based Washington Mutual for USD $1.9-billion.
• In August 2002, NAB sold HomeSide's remaining mortgage servicing rights (MSR) and related financial hedges also to Washington Mutual for USD $1.3-billion. HomeSide had suffered heavy losses and write-downs due to challenging operating environment for a foreign owner like NAB.
• In 2005, National Australia Bank sold its Irish and Northern Irish banking operations (National Irish Bank and Northern Bank) to Denmark's Danske Bank A/S for GBP 967-million (AUD $2.5-billion, USD $1.86-billion, DKK 10.4-billion).
• In 2007, NAB bought Sioux Falls, South Dakota-based Great Western Bancorporation for AUD $ 900-million (USD $798-million). Great Western is privately-owned and had over 100 branches in South Dakota, Iowa, Nebraska, Kansas, Missouri and Arizona. NAB said that the purchase would be an important move for its expansion in the farm financing area.
• In 2009, NAB bought Aviva plc's Aviva Australia Holdings for AUD $825-million (GBP 403-million), plus up to another AUD $100-million in adjustments after the completion of the deal.
• In August 2009, NAB bought the mortgage unit of Challenger Financial Services for AUD $385-million (USD $316-million). The unit had AUD $4-billion worth of loans.
• In December 2009, NAB offered to take over AXA Asia Pacific Holdings Ltd. for AUD $13.3-billion (Eur 8.22-billion, USD $11.83-billion) in cash and NAB shares, on the condition that French insurance giant AXA S.A. agreeing to buy AXA Asia Pacific's operations in Hong Kong, China, Thailand, Malaysia, Singapore, Indonesia, the Philippines and India for AUD $8.69-billion. That would leave NAB with AXA Asia Pacific's Australian and New Zealand operations at a net cost of AUD $4.61-billion. AXA S.A. currently owned 54% of AXA Asia Pacific, with the rest of the shares being publicly-traded. Earlier, AXA S.A. and Australian insurer AMP had agreed to acquire AXA Asia Pacific for AUD $12.85-billion in cash and AMP shares, with AMP keeping the Australian and New Zealand units and selling the rest of the Asian operations to AXA S.A.
• In April 2010, Australia's competition watchdog unexpectedly blocked NAB's plan to take over AXA Asia Pacific, opening the door for AMP to renew its expired bid. NAB formally terminated its bid for AXA Asia Pacific in September 2010 after failing to appease the competition authority's opposition.
• Between October 2014 and July 2015, NAB floated its American subsidiary Great Western Bank through three tranches and raised a total of USD $1.1-billion (AUD $1.46-billion). Great Western Bank was based in South Dakota and had 162 branches in South Dakota, Iowa, Nebraska, Colorado, Arizona, Kansas and Missouri. It specialized in business and agriculture lending, but was considered to small and too remote from NAB's home market to be run efficiently.
• In May 2015, NAB announced that it would spin off its British retail banking operations. The business consists of Scotland's Clydesdale Bank and England's Yorkshire Bank, which together have a network of 294 branches across Britain.  NAB will pass 80% of the yet-to-be-named listing to its shareholders while selling the remaining 20% to institutional investors.
• In October 2015, NAB announced that it had agreed to guarantee GBP 1.7-billion (AUD $3.68-billion, USD $2.60-billion) of indemnity against potential future compensation payout related to 'payment protection insurance' (PPI) malpractices by its British operations. The indemnity agreement paved the way for NAB to exit the British retail banking market by way of floating its Clydesdale and Yorkshire Banks. As previously announced, NAB would spin off 75% of the British unit, to be named CYBG, to its existing shareholders, and sell the rest to institutional investors.  CYBG would obtain a listing on the London Stock Exchange to allow the shareholders to trade the shares.
• Also in October 2016, NAB sold 80% of its life insurance operations to Japan's Nippon Life Insurance Co. for AUD $2.4-billion (JPY 205.7-billion, USD $1.7-billion). NAB and other Australian banks had been found guilty of multiple unethical and illegal business misconducts during the 2000s and have been required to compensate clients and change their business practice. The sale of the life insurance business is part of the plan to simplify the operations and complexity of NAB.
• In August 2021, NAB announced that it would buy Citigroup's Australian consumer banking operations for AUD $1.2-billion (USD $882-million). The deal would see NAB gaining AUD $12.2-billion in loans and AUD $9-billion in deposits. About 800 existing Citi employees would be transferred to NAB.

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Australia Bank Mergers & Acquisitions (Bank of Queesland, Bendigo & Adelaide Bank)

Bank of Queensland Ltd.

Bank of Queensland was established in 1874 as The Brisbane Permanent Benefit Building and Investment Society. In 1887, the building society converted to the commercial bank form. The name Bank of Queensland was adopted in 1970, though it wasn’t until 1985 that the bank’s first branches outside of Brisbane – in Cairns and Townsville – were opened. Between 2001 and 2004, BOQ entered into a phase of rapid expansion and opened 55 branches within the state of Queensland, and launched an initiative to expand outside the state.

Recent transaction(s):

• In 2006, Bank of Queensland (BOQ) acquired Mackay, Queensland-based Pioneer Building Society for AUD $50-million. Pioneer operated a network of branches in central and northern Queensland.
• In 2007, BOQ bought Home Building Society for AUD $592-million. The purchase gave Bank of Queensland a major network in Western Australia.
• In 2007, Bank of Queensland made a hostile offer to purchase Bendigo Bank Ltd. for AUD $2.5-billion (USD $2.0-billion). Bendigo Bank was founded in 1858 near the Bendigo goldfield to offer banking service for the gold miners. The combined bank would have had a network of 575 branches in Australia; however, Bendigo Bank’s management rebuffed Bank of Queensland’s proposal. Later in 2007, Bendigo Bank agreed to take over Adelaide Bank to form the Bendigo and Adelaide Bank, and Bank of Queensland’s proposal failed.
• In March 2010, BOQ acquired St. Andrew's insurance business from the Commonwealth Bank of Australia for an undisclosed amount. St. Andrew's had about 165,000 policyholders.

Bendigo and Adelaide Bank Ltd.

Bendigo Bank was founded in 1858 near the Bendigo goldfield to offer banking service for the gold miners.

Recent transaction(s):

• In 2007, after rebuffing Bank of Queensland's AUD $2.5-billion (USD $2.0-billion) offer to merge, Bendigo Bank Ltd. agreed to acquire Adelaide Bank Ltd. for AUD $1.9-billion (USD $1.6-billion). The new bank was renamed Bendigo and Adelaide Bank Ltd. Adelaide Bank's 25 branches would be added to Bendigo's 357-branch network.

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Australia Bank Mergers & Acquisitions (Australia & New Zealand Banking Group)

Photo: The English, Scottish & Australian Bank merged with ANZ Bank to become the Australia and New Zealand Banking Group in 1970.


Australia and New Zealand Banking Group Ltd.

Australian and New Zealand Banking Group Ltd. (now often known as ANZ) began life in 1835 when the Bank of Australasia was incorporated in London by Royal Charter. In 1951, the Bank of Australasia merged with the Union Bank of Australia (founded in 1837) to form ANZ Bank. In 1970, in what was then the largest banking merger in Australian history, ANZ Bank merged with the English, Scottish and Australian Bank (founded in 1852, also known as ESA Bank) to form the present Australia and New Zealand Banking Group Ltd.

Like many British colonial banks, ANZ Banking was founded in London in Victorian times. It only moved its country of registration to Australia in 1977, finally making it a truly Australian-based bank.

In 1984, ANZ Banking acquired Grindlays Bank, a British colonial bank that was active in the Indian sub-continent and the Middle East, but it was subsequently sold to Britain's Standard Chartered Bank in 2000.

Recent transaction(s):

• In 2003, Australia and New Zealand Banking Group purchased National Bank of New Zealand (NBNZ) for AUD $4.92-billion (GBP 2.25-billion) from Britain's Lloyds TSB Group plc (now Lloyds Banking Group).
• In 2005, ANZ bought 19.9% of China's Tianjian City Commercial Bank for USD $120-million.
• In 2006, bought 19.9% of China's Shanghai Rural Commercial Bank for AUD $328-million (USD $252-million).
• Also in 2006, bought 13.5% of Malaysia's 5th largest bank AMMB Holdings for AUD $494-million (USD $383-million).
• In 2009, ANZ bought Royal Bank of Scotland's operations in 6 Asian countries for USD $550-million (AUD $656-million, GBP 324-million). The purchase included 54 branches, USD $3.2-billion in deposits, USD $7.1-billion in loans and 2 million clients in Hong Kong, Singapore, Taiwan, Philippines and Vietnam.
• Also in 2009, ANZ bought out the remaining 51% stake in ING Australia and ING New Zealand that it did not own from its partner ING Groep for AUD $1.76-billion (Eur 1.1-billion, USD $1.5-billion). The units bought were in the life insurance and wealth-management business. ING Groep and ANZ merged their Australian and New Zealand life insurance and wealth-management units back in 2002, with ING owning 51% and ANZ owning 49% of the combined units. Not included in the deal were ING’s other businesses in Australia: ING Direct, ING Investment Management, ING Wholesale Banking and ING Real Estate.
• In October 2016, ANZ sold its retail and wealth management operations in Hong Kong, Singapore, China, Taiwan and Indonesia to Singapore' DBS Group Holdings for SGD $110-million above book value.
• In January 2017, ANZ sold its 20% minority stake in China's Shanghai Rural Bank for AUD $1.84-billion (USD $1.32-billion, CNY 9.19-billion). The buyers are China Cosco Shipping Corp. and Sino-Poland Enterprise Management Development Corp., each taking a 10% stake.

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