CBA Interest In Acquiring A Stake In Lloyds Fund Management Unit

Post by Sharat on June 15, 2009 · Under Business News, International Business News, Mergers & Acquistions, banking · Comment

Australian banking major Commonwealth Bank of Australia (CBA) is thought to be interested in purchasing a stake in British banking giant Lloyds fund management business reportedly valued at $607 million, according to a report in the British newspaper the Sunday Times.

The Times suggested that CBA was one of several bidders interested in purchasing a stake in purchasing a stake in Insight Investment Management’s £75 billion third-party fund business.

A CBA spokesperson told The Times that CBA had no comment on market speculation or strategy.

CBA is said to be interested in purchasing a stake valued at between 200 to 300 million Pounds, with the deadline for first round bids at the end of this week.

Since the global banking crisis reached its zenith, CBA has used the opportunity of diminished valuations to purchase the assets of distressed banking groups. Last year CBA acquired Bankwest for $2.1 billion, a heavily discounted price from troubled UK lender HBOS.

Last year, the British government encouraged Lloyds Banking Group to acquire HBOS, which has resulted in the replication of life insurance and fund management businesses. Though publicly Lloyds has expressed its intention to merge the replicated businesses, The Sunday Times report suggests that asset sales are more likely.
The report says that a limited number of bidders have been invited to tender and other parties include Schroders Investment Management, as well as private equity firm Advent International.

CBA has come under criticism for raising interest rates on both home and business loans citing increased wholesale funding costs as its reason for doing so.

CBA raised its interest rate by 10 basis points with its Standard Variable rate having been increased from 5.64 per cent to 5.74 per cent. The Australian central bank has left the official interest rate unchanged which is currently at half century lows.

Federal Treasurer Wayne Swan, slammed the lender as being selfish for increasing its interest rates, and said that the rate rise ran counter to the Governments stimulus package designed to help ordinary Australians get through the current economic slowdown.

Compare Australian Credit Card Deals