HBOS set for BankWest victory

HALIFAX Bank of Scotland looks set to mop up Australian subsidiary BankWest when shareholders vote whether to accept the offer on Monday.

HBOS is attempting to buy the 43% of the bank it does not already own at a cost of about £420m, valuing the entire division at A$2.4bn (£980m).

Although the offer, made by scheme of arrangement, has faced hostility, a sell-out by disaffected institutions ahead of the vote has reduced the chances of a shareholder revolt.

Leading local institutions have accused the British bank of parsimony and bullying tactics over the bid, which culminated in an ultimatum sent last week by HBOS chief executive James Crosby to the BankWest board.

After declaring HBOS would not raise its A$4.25-a-share offer, Crosby said BankWest 'may well become an entirely different investment proposition' should the bid be rejected.

'In the current environment, we believe it is no longer appropriate for HBOS to take the risks involved in lending the benefits of its balance sheet and know-how to a partly owned and overseas subsidiary,' Crosby wrote.

After initial speculation that the mop-up was simply a preliminary to a full sale, HBOS now says it is in BankWest for the long haul and that it is planning a move on the bigger markets of the Australian eastern seaboard.

Perth-based BankWest is Australia's seventh-largest bank and has its stronghold in Western Australia, but HBOS has outlined plans to expand into other districts.

HBOS unit St Andrews Insurance, which began operating its credit and loan insurance business in Australia five years ago, recently applied for a life insurance licence, prompting speculation that it could form part of an enlarged HBOS/BankWest offering.

But analysts believe that, if HBOS is serious about a national presence, it will have to make an acquisition in one of the eastern Australian states.

In New Zealand, HBOS has also been mentioned as a potential bidder for Lloyds TSB unit National Bank of New Zealand.

Meanwhile, doubts are growing about whether the Australian frontrunners to buy the Kiwi bank will win regulatory approval. Investors also question whether ANZ Bank, which said this week that it was in talks with Lloyds, can afford the estimated NZ$6bn (£2.2bn) price tag. If the Aussies win NBNZ, all five major Kiwi banks will be in Australian hands.