HBOS moved one step closer to completing its acquisition of the minority interests in BankWest, its Australian subsidiary, after minority shareholders and option holders voted to sell their stake to the Edinburgh bank for (pounds) 431m in cash.
The bank, formed by the merger of Bank of Scotland and the Halifax, now has full control of the Australian unit pending a Perth court meeting on August 26 to approve the deal.
The proposal to buy the 43% of the Perth-based lender it does not already own received approval from 84% of the votes cast and 79.9% of shareholders who voted at a special meeting. HBOS is paying A$4.25 and a 10% dividend for each share.
In a statement to the stock exchange, George Mitchell, chief executive of corporate banking at HBOS, said: ''HBOS is pleased with the outcome of the scheme (of arrangement) meeting as it is an important step in providing BankWest with the stability and prospects to further develop a significant Western Australian-based business in the wider Australian market.''
Last month, during HBOS's half-year results, Mitchell said the bank planned to invest in and expand BankWest. This surprised many industry observers as Bank of Scotland had previously tried to offload the unit, but did not receive an offer that matched its valuation of the business.
Mitchell said: ''We are certainly not dressing it up to sell. Our intention is to be a bigger and better bank in Western Australia.''
Asked why HBOS, and Bank of Scotland before it, had not invested in BankWest to grow the business before, Mitchell said it was because it did not own all the equity and therefore would not reap all the benefits.
However, one Australian analyst, who asked not to be named, still questioned HBOS's long-term commitment to BankWest and dismissed the British bank's plan to build the business as merely ''rhetoric''.
He added: ''At the (interim results), the bank had to be seen to be committed to it otherwise both the (Australian) government and shareholders would have reacted against them. I would think it would be sold at some time because they have tried to sell it in the past. In the long-term it remains doubtful it will stay under their (HBOS) ownership. In all their presentations BankWest never gets mentioned. I struggle to see where it fits. It is not a core part of the business.''
The analyst said HBOS would find it difficult to find a buyer for BankWest as it had been on the block for some time. However, he said the most likely buyers would be the ''second-tier banks'' in Australia such as St George, Sun Corp and Metway.
At the half-year results, Mitchell indicated HBOS might use BankWest to help boost the profile of Bank of Scotland's modest corporate lending operation in the region. It currently acts as an introducer on some deals, but Mitchell seemed keen to increase this activity.
HBOS needed more than half of voting shareholders to approve the deal and for at least 75% of shareholders to vote.
BankWest increased first-half profits by 13% to A$118m. HBOS also saw profits rise by 21% in the first half as it increased its market shares of UK credit cards and current accounts and boosted corporate lending. Shares in HBOS fell 3p to close at 747p last night.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article