Westpac Buys Lloyds Australia Assets

MELBOURNE, Australia--Westpac Banking Corp. (WBC.AU) has struck a 1.45 billion Australian dollar (US$1.37 billion) deal to buy the Australian businesses of Lloyds Banking Group PLC (LLOY.LN), its largest acquisition in five years.

The acquisition includes Lloyds' vehicle finance book of A$3.9 billion, equipment finance book of A$2.9 billion and a corporate loan portfolio with a value of A$1.6 billion, Westpac said Friday in a filing to the stock exchange.

"These are strongly performing businesses that we know well and that will expand our reach and capability in target segments," said Gail Kelly, Westpac's chief executive.

The acquisition is the Australian lender's largest since it paid A$12.6 billion for St. George Bank Ltd. in 2008.

Lloyds is off-loading assets it considers noncore to shore up its balance sheet after it was bailed out by the government in 2008. The U.K. government last month sold 6% of its stake in the lender for GBP3.2 billion, cutting its holding to 33% as part of a return to full private ownership.

Lloyds sold A$371 million of its Australian loan portfolio in August to Sankaty Advisors LLC, the credit affiliate of private equity firm Bain Capital LLC. Nearly two years ago, it sold GBP1 billion (US$1.6 billion) in commercial real estate assets in Australia and New Zealand.

Westpac, Australia's third-largest bank by assets, said the deal is expected to deliver about A$100 million in additional cash earnings by fiscal 2015. Integration costs are expected to be about A$130 million and ongoing synergies about A$70 million before tax a year, it said.

Australian investment bank Macquarie Group Ltd. (MQG.AU) and a consortium led by non-bank lender Pepper Australia Pty. also bid for the assets, people familiar with the auction had earlier said. Australia & New Zealand Banking Group Ltd. (ANZ.AU) withdrew from the process before final offers were due Sept. 30, people said at the time.

Write to Robb M. Stewart at [e-mail]

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