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How the Westpac-St George merger affects you

How the Westpac-St George merger affects you

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Date Published : Monday, June 02, 2008

As the dust settles on one of the largest changes to the Australian financial sector for decades, consumers across the country are pondering how the events at Westpac and St George will impact on them.

Last week, St George recommended to its shareholders that Westpac's $19 billion takeover of the Sydney-based bank should go ahead, after the two lenders signed an implementation agreement.

As a result, the proposed merger will create Australia's biggest financial institution, eclipsing National Australia Bank (NAB) and Commonwealth Bank.

The newly-created lender will have a large say on the Australian mortgage market, with it having a 25 per cent of the home loan market sector. This could lead to reduced competition in the sector which, some analysts fear, could harm the property market.

Customers of the two banks may also see a reduction in the number of banking branches, as the new firm will seek to close over 200 branches in towns and cities where the two currently operate in direct competition.

However, the bigger Westpac entity will likely be able to ride out any effects of the global credit crunch more easily, with a larger customer base and an increased lending book. Customers will be able to access a wider range of products, with St George's expertise in home loans proving invaluable to Westpac.

Meanwhile, the credit card, banking and personal loans sectors are all likely to see new products to be introduced.

Despite this deal, customers of other banks worried that their financial institution may be the next target of a merger have been put at ease.

Federal treasurer Wayne Swan stated that the "four pillars" banking policy - which does not allow mergers between Westpac, Commonwealth Bank, ANZ and NAB - will continue to be in place.

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