Bloomberg News

Westpac Said to Have Bid About A$2.1 Billion for Lloyds Assets

October 08, 2013

Westpac Offices

The Westpac Banking Corp. logo is displayed outside the company's Kent Street offices in Sydney. For Westpac, the second-largest mortgage lender in the country, buying the Lloyds Banking Group Plc's assets would expand its auto leasing and corporate-loan portfolio. Photographer: Ian Waldie/Bloomberg

Westpac Banking Corp. (WBC), Australia’s second-biggest lender by market value, bid about A$2.1 billion ($2 billion) for Lloyds Banking Group Plc (LLOY)’s assets in the country, said a person with knowledge of the matter.

Westpac is in discussions with Lloyds on the offer, said two people with knowledge of the process, who asked not to be identified because the information is private. Macquarie Group Ltd. (MQG) and Pepper Australia Pty have also made bids for the assets, people familiar with the matter have said.

The deal would mark Westpac’s biggest acquisition since it bought St. George Bank Ltd. for A$18.5 billion in 2008. Chief Executive Officer Gail Kelly, who ran St. George before the Westpac takeover, in May agreed to pay a special dividend for the first time since 1988 after first-half cash earnings rose 10 percent.

Westpac’s offer would include about A$360 million of goodwill for about A$1.7 billion of net assets, the person said. Goldman Sachs Group Inc. (GS:US) is advising Lloyds on the sale, which includes the car leasing Capital Finance unit and corporate loans valued at more than A$2 billion, people familiar with the process have said.

Lloyds is strengthening its balance sheet by selling assets and cutting costs following the bank’s 20 billion-pound ($32 billion) bailout in 2008. Lloyds International Pty, the London-based lender’s Australian unit, reported a loss of A$148.3 million in 2012, after a shortfall of A$1.2 billion the previous year, according to company filings. The division reduced assets by 24 percent to A$12.2 billion last year, the documents show.

Spokesmen for Westpac, Lloyds, Macquarie and Pepper declined to comment on the transaction.

Australia’s so-called four-pillar policy prevents the largest four banks -- Australia & New Zealand Banking Group Ltd. (ANZ), Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac -- from buying each other.

For Westpac, the second-largest mortgage lender in the country, buying the Lloyds assets would expand its auto leasing and corporate-loan portfolio.

To contact the reporters on this story: Paulina Duran in Sydney at pduran10@bloomberg.net; Brett Foley in Melbourne at bfoley8@bloomberg.net; Narayanan Somasundaram in Sydney at nsomasundara@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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