Lloyds TSB poised to seal NZ sell-off

BANKING group Lloyds TSB could finalise the £1.78bn sale of its New Zealand arm to Australia's ANZ this week, according to local reports.

ANZ is thought to be in final talks with Lloyds and the New Zealand regulators, who are anxious to protect depositors' rights as National Bank of New Zealand - the last bank not in Australian banks - cedes control across the Tasman.

The Australian bank is due to report full-year results on Friday, when some analysts predict it will release details of the acquisition.

ANZ acknowledged only ongoing discussions. 'We have reached no agreement of any nature with Lloyds regarding NBNZ,' a spokesman said. The deal would be the biggest in Australian banking history. It would catapult ANZ ahead of Westpac as the country's third-largest bank.

Analysts say it would require one of the biggest rights issues in Australian history, that would require a deep discount. Investors have been worried about the cost. 'I think if they pay more than NZ$5.5bn the market is going to get a bit nervy,' said one analyst.

ANZ was cleared as a bidder by the New Zealand Commerce Commission, the competition watchdog, last month, but it still needs the approval of the central bank.

The Reserve Bank has said it is concerned about the concentration of banking in Australian hands. Discussions with ANZ are believed to be centred on giving New Zealand depositors the same rights as Australians should the bank collapse.

ANZ emerged as the one confirmed bidder after Westpac dropped out.

A former New Zealand wool industry executive, Phil Verry, is leading a group called the Black Horse Holding Consortium, but analysts do not see him as a contender.