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Westpac Online Investing Slashes Brokerage Fees
Westpac Online Investing is seeking to increase its market share by the middle of next year, and as part of that plan has slashed its brokerage fees, bringing them into parity with larger rivals Commec and E*Trade.
Previously Westpac Online Investing customers who held cash investment accounts were charged $24.95. Westpac has reduced the brokerage fee to $19.95 according to a report in the Australian Financial Review.
Additionally, Westpac clients who conduct three or more trades every month, will be eligible for a variable bonus rate of 0.9 per cent, taking the total rate to 5.65 per cent.
Currently, Westpac controls about 10 per cent of the online market, compared with about 50 per cent by Commsec and 18 per cent by E*Trade, according to the AFR.
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Will Goldman Sachs Ever Buy Full Control Of Its Australian Joint Venture
Every couple of years the rumour mill begins with speculation that investment banking powerhouse Goldman Sachs will buy the 55 per cent stake in its Australian joint venture Goldman Sachs & Partners that it does not own.
The reason for the two year cycle, according to a report in The Australian is that it coincides with a 90 day window of opportunity for Goldman’s to discuss the stake sale with its domestic joint venture’s 120 plus shareholders.
The arrangement is part of the deal that was negotiated when Goldman acquired its 45 per cent stake in 2003, and was designed to allow both stake holders to regularly review their Australian business.
Despite what many of Goldman rivals actually believe, the window of opportunity for the time being has closed, and the shareholding structure will continue as before.
The fact that for now there is no change in ownership, does not preclude that in the future Goldman will not pursue seeking full ownership of its Australian operations. Goldman Sachs executives have always had a cordial relationship with the management of its Australian joint venture, most of whom are now in fact from Goldman Sachs, which means there is no reason why a sale could not take place outside the traditional window of opportunity.
Australia is the only market which Goldman Sachs operates in where it does not exert 100 per cent control of its entity, and whilst an outright sale to the investment bank would make little difference to its Australian capital markets or M&A operations which are already well integrated with Goldman Sachs globally, full ownership would gives its sales and trading operation access to larger balance sheet funding.
In the immediate aftermath of the financial crisis, it was always unlikely that Goldman’s would initiate a stake sale or enter acquisition mode, but as the recovery builds momentum assessing its options is certainly much more realistic.
Despite the number of reasons for Goldman’s to initiate a full takeover, it may be still be reluctant to do a deal fearing it may upset key executives who already run a successful business franchise by appearing to take over full management control.
The deciding factor, of course, will be price.
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Suncorp To Sell Fund Management Business To Nikko Asset Management
Bancassurance firm Suncorp on Tuesday announced the sales of its Tyndall Investment Management fund management business as it moves to further streamline its operations.
Suncorp is selling the division to Nikko Asset Management, a Japanese financial services firm that is seeking to enter the Australian market for $128.5 million. Tyndall manages approximately $18 billion for Suncorp, and the bancassurer will remain its major client even after Nikko assumes control of the business.
Over the last decade, Suncorp’s growth has largely been fuelled through acquisition. Many of its acquisitions brought with them businesses that were not core to Suncorp’s primary business activities. Suncorps ownership of Tyndall stems from its acquisition of Promina.
Since September, when current Suncorp chief executive Patrick Snowball assumed the helm, the company has embarked on a strategy of streamlining its operations by selling of non-core assets. The bancassurer decided that its fund management unit did not compliment its general insurance business.
Nikko is planning to use the acquisition as a platform for building a substantial business in Australia.
Nikko, which has $122.15 billion under management is currently owned by Sumitomo Trust and Banking which acquired its 64 per cent stake in the financial services firm from Citigroup last year.
Tyndall manages $25 billion of assets in New Zealand and Australia.
Charles Beazley who heads up Nikko’s international and institutional business said that Nikko is keen to build a business in Australia, which has one of the largest fund management markets in the world.
“We have ambitions to be the biggest fund managers in Asia, and so, in addition to a presence in Singapore, London, New York and Tokyo, we’ll now have a presence in Brisbane, Sydney, Melbourne and Auckland. It’s a good strategic opportunity for us as a company, but we also like the local opportunity that this acquisition signals.” he said.
Tyndall last year made a profit of $10.2m, so the sale implies a multiple of up to 12.6 times Tyndall’s normalised 2010 net profit.
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ANZ Says It Remains In The Running For Korea Exchange Bank Acquisition
Australian banking major ANZ says it remains confident it will be successful in its attempt to acquire a controlling stake in Korea Exchange Bank (KEB), after its bid price was trumped by Korean financial services firm Hana Financial.
On Tuesday The Wall Street Journal reported that Hana Financial had already clinched the deal, after acquiring preferred business status for the 51 per cent stake which has been put up for sale by US Private Equity group Lone Star Funds.
Should Hana Financial ultimately prevail it would represent a significant setback for ANZ’s efforts to transform itself into a pan Asian player, with a strong presence in a developed market such as Korea.
Hana Financial is the fourth largest financial services player in Korea, and according to the Wall Street Journal, the company is already in exclusive negotiations with Lone Star, and a deal could be announced as early as next week.
For its part ANZ says it continues to conduct due diligence on the proposed transaction.
“Korea is an important market in the global economy with strong trade ties across Asia and ANZ believes that exploring strategic and organic growth opportunities in Korea is a logical fit with its super regional strategy,” the bank said in a statement to the Australian Stock Exchange. “ANZ has previously advised that it would only proceed with a transaction if it satisfies its disciplined criteria, including an anticipation of shareholder value accretion.”
The KEB stake that is being sold also includes Export Import Bank of Korea’s 6.27 per cent holding. Lone Star’s stake had a $3.8 billion valuation attached to it, however it is believed that Hana Financial had offered a 10 per cent premium to that valuation.
According to news reports. Hana Financial and Lone Star have already signed an MoU, with a sales and purchase agreement expected to follow shortly.
“We have signed a non-binding memorandum of understanding with Lone Star to take over Korea Exchange Bank. Currently, we are doing a due diligence study of Korea Exchange Bank.” Hana Financial chairman Kim Seung-Yu said.
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Wall Street Journal Reports Shock ANZ Loss In Bid To Acquire Korea Exchange Bank
The Wall Street Journal has reported that Korean financial services firm Hana Financial has already acquired a 51 per cent stake in Korea Exchange Bank (KEB) from US Private Equity Firm Lone Star Funds for US$4.2 billion.
IF the report is true, it would mean that Hana Financial has managed to snatch the target company out of the arms of suitor ANZ, which has yet to confirm or acknowledge that a transaction has taken place.
ANZ was in the process of conducting due diligence on the proposed acquisition of the 51 per cent stake in KEB from Lone Star, and was the lender was thought to be the only buyer interested in acquiring the stake. News of a done deal with Hana Financial will most certainly come as a shock to ANZ.
Losing out on the deal would be a blow to ANZ’s aspirations of transforming itself into a super regional lender, even if the reported purchase price is higher than the level ANZ was prepared to pay.
The acquisition seems to have come out of nowhere, since it was widely believed that Hana Financial was the front runner for acquiring the impending divestment by the Korean Government of its stake in Woori Finance.
Lone Star acquired its stake in KEB for US$1.3 billion back in 2003. The 51 per cent stake is currently valued at US$3.8 billion. Lone Star has been shopping its KEB stake around for many months now, with several deals coming close to be concluded before collapsing for a variety of reasons.
ANZ chief Mike Smith for the last few months has been talking up the prospects of acquiring the KEB stake, saying the Korean banks specialization in trade and foreign exchange would be a good fit for ANZ’s portfolio of Asian assets.
He has also successfully sold the Asian story to investors so this deal would maintain momentum at a time when ANZ enjoys a market premium in Australia.
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Australian And Singapore Stock Exchanges To Merge
Australia’s stock exchange ASX Ltd has agreed to merge with the Singapore stock exchange (SGX) in a deal that will create the second largest bourse in the Asia Pacific region.
The deal is valued at $8.4 billion and will result in SGX acquiring all outstanding ASX shares through an arrangement scheme, paying $22 in cash, and 3.473 new SGX shares per ASX share.
The deal still requires regulatory approval from both the Australian and Singapore authorities, including Federal Treasurer Wayne Swan, The Monetary Authority of Singapore and the Australian Securities and Investments Commission (ASIC).
The transaction is expected to be approved by both regulators and shareholders during the first half of 2011 and the merger executed during the second half of the year.
The merged entity will have combined revenues of $1.12 billion, and earnings before taxation and interest of $711.6 million.
The market capitalisation of the combination of two exchanges was $12.5 billion on October 22nd.
The combined exchanges would give investors access to in excess of 2700 listed companies from over 20 countries and would provide the largest range of equity, fixed income and commodity derivatives in the Asia Pacific.
“The combination leverage’s the strengths of ASX through its listings, stock options and fixed income franchises, with SGX, the Asian gateway for international listings, equity futures and OTC clearing, to create the regions pre-eminent exchange group,” ASX said in a statement.
Both exchanges will retain their structure as separate legal entities and maintain their respective brands, with the holding company ASX-SGX Ltd listed on both the Singapore and Australian exchanges.
The merged company will have a 15 director board, four of whom will be nominated by the ASX. The chief executive of the combined company is expected to be SGX CEO Magnus Bocker, whilst Chew Choon Seng the chairman elect of SGX is expected to take the role of non-executive chairman, with ASX’s David Gonski to assume the role of deputy chairman.
It will have a board of 15 directors from five countries, four of whom will come from the ASX board – David Gonski, Russell Aboud, Jillian Broadbent and Alan Cameron.
Robert Elston CEO of ASX said that the deal was unanimously approved by the boards of both exchanges.
“In a period of profound structural change in financial markets, ASX has carefully considered its strategic options to enhance its future competitiveness,” he said.
“This combination delivers tangible value today and presents the opportunity for shareholders, customers, employees and other stakeholders to participate in the growth options that this broader based exchange group can make available in the future, whilst preserving strong governance and regulatory oversight in Australia.”
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ANZ May Bid For 100 Per Cent Stake In KEB
Australian banking major ANZ is thought to be considering the possibility of engaging in a full acquisition of Korea Exchange Bank (KEB), which would require the lender to raise as much as $3 billion in fresh equity.
The lender is currently conducting due diligence on acquiring a 57 per cent stake in the Korean bank, which is owned by Export Import Bank of Korea, and Private Equity Firm Lone Star.
Victor German, an analyst with Japanese investment bank Nomura says he expects ANZ to have to raise at least $1.6 billion, and would be very surprised if the lender was not considering bidding for a full 100 per cent stake in KEB.
“Under the new Basel III rules, ANZ would need to raise about $1.6bn for a 57 per cent stake and about $3bn for a 100 per cent stake, If ANZ is successful, we believe it would look to increase its stake over time. Full control would provide ANZ with both financial and strategic flexibility, and secondly, under the proposed Basel III capital rules, holding a controlling stake results in a dilutive earnings impact.” Mr. German said.
Not everyone is convinced that ANZ will be compelled to raise fresh equity. Last week Morgan Stanley said it did not see ANZ needing to raise capital to fund an acquisition based on prices ranging between 0.7 to 1.5 time price to book value. Such prices would imply a valuation of KEB of between US$2.9 billion to US$6.2 billion.
Lone Star acquired its stake in KEB as far back as 2003 and has so far made to unsuccessful attempts at exiting its investment and selling its stake in KEB. ANZ has embarked on a strategy of transforming itself into a super regional lender which derives at least 20 per cent of its group profit from Asia by 2012.
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ANZ Keeps KEB Funding Options Open
Australian banking major ANZ says it is keeping its options over regarding funding should it decide to go ahead with a $4.3 billion acquisition of a controlling stake in Korea Exchange Bank (KEB).
The lender already has enough regulatory capital to support the acquisition from existing cash reserves and debt. ANZ has a tier one capital ratio of 10.5 per cent and has said it will not rule out a future capital raising to maintain its strong position.
Reports surfaced over the weekend that the lender had finished its due diligence on KEB, but was continuing its examination of KEB’s books, with a deal likely to be completed by November at the earliest.
US private equity firm Lone Star has been seeking to sell its 51 per cent stake in KEB.
Many believe that should ANZ undertake a entitlements based equity raising, it would be well received by investors, given the recent strong performance of the lenders shares against its big four rivals.
ANZ was initially lukewarm towards a proposed acquisition in Korea, saying that the market was “a bit left field”, and that Korea did not constitute a key franchise market in the same way China and India under pin its super regional strategy.
Citing an opportunistic strategy ANZ chief Mike Smith says such an acquisition needs to evolve to include less important by attractively priced assets.
KEB controls as much as 45 per cent of the market for trade finance, and there is almost no pressure from other bidders, after ANZ bid an initial $2.6 billion.
ANZ’s board is currently holding its meeting in Shanghai this week, ahead of a likely announcement that the lender will incorporate a wholly owned local subsidiary in China.
ANZ said last November that it would invest an additional US$400 million in China as it seeks to expand in China by establishing as many as 20 branches by 2012.
The bank’s objective is to lift regional profits to 20 per cent of group earnings by 2012.
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CBA Wants To Raise Stake In Vietnamese Lender
Australian banking major CBA says it wants to raise its holdings in Vietnam International Bank (VIB), from the current level of 15 per cent to a proposed level of 20 per cent.
The lender said on Wednesday that intends to raise its holding in VIB once it completes its negotiation with the bank for strategic partnership.
CBA acquired the 15 per cent stake in the Vietnamese lender after it had confirmed it received regulatory approval for the sale which made CBA the solitary foreign strategic shareholder in April.
“Consistent with the strategic partnership agreement signed earlier this year, Commonwealth Bank intends to request an increase in the VIB investment to 20 per cent at the earliest opportunity – the maximum investment allowed by the State Bank of Vietnam,” CBA said in a statement.
CBA failed to disclose financial aspects of the transaction citing that the money concerned is below the materiality threshold for the company.
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Competition Regulator Rejects NABs Proposed Acquisition Of AXA Asia Pacific Holdings
The Australian Competition and Consumer (ACCC) has given its final verdict on the proposed acquisition of AXA Asia Pacific Holdings (APH) by NAB, delivering what can only be described as a death blow to the proposed $13.3 billion bid, by saying it remains opposed to any deal.
The failure to give its blessing stalls NAB’s plan to become the clear dominant player in the Australian wealth management space, and further complicates APH’s parent AXA SA ambition to expand substantially in Asia.
The regulator stood by its earlier decision on April 19th when it rejected what would have been the second largest deal in Australian financial services history.
The completion watchdog argued that the acquisition would curtail competition in the market for supply of retail investment platforms, internet portals that link retail investors with the wide range of investment products that fund management companies provide.
Peter Kell, deputy chairman of the commission said that the proposed concessions by NAB and APH to divest the target company’s North investment platform to a smaller wealth manager, IOOF, “do not provide sufficient certainty that the ACCC’s competition concerns will be addressed”.
The regulators reasoning was that IOOF lacked the infrastructure required to make the investment platform a competitive force to be reckoned with in its own right.
The ACCC added that because both the acquirer and target company’s had failed to agree to include their combined distribution network of financial planners, or sell products supported by the North platform to IOOF, there was “considerable uncertainty” that IOOF could become an effective competitor to the combined NAB-AXA.
“The undertakings as proposed place a heavy reliance upon IOOF having sufficient distribution capability to provide an effective competitive constraint upon existing key players in the foreseeable future,” said Mr Kell.
APH’s stock price fell sharply as trading opened, falling by as much as 8.6 per cent by early afternoon trading, with Goldman Sachs saying that NAB was likely to call it a day with its bid.
“In our view, the most likely option is for NAB to walk away and pursue an organic acquisition strategy of advisers rather than a large acquisition,” Goldman Sachs analyst Ben Koo said in an early note to clients.
Contrastingly NAB stock rallied 3.8 per cent on the news.
Goldman’s Koo said that whilst it was possible that NAB may challenge the decision, or restructure its bid to include the sale of its financial planning network, cosmetic changes to a deal may still not guarantee approval.
“In the near term, fears of a large capital raising will now dissipate for NAB however M&A uncertainty will remain an overhang until NAB clarifies its response to the ACCC decision,” said Mr Koo.
NAB said earlier it is considering the implications of the decision and will update the market “as soon as possible”.
The other interested parties to the deal including rival bidder AMP all said they would evaluate their position before outlining what their next steps would be.
AXA SA, the French parent of APH said through a spokesperson that it was disappointed with the regulators decision, but will review the decision carefully before further commenting.
APH said through a statement that it had taken note of the decision but a spokeswoman wasn’t immediately available for further comment.
Rival bidder AMP for its part welcomed the decision and said it continues to find APH an attractive strategic target, but did not feel compelled or sense any urgency in making any quick moves.
A spokeswoman for AMP said whether the group will seek fresh talks with AXA SA is “a decision for another day”.