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Westpac acquires select businesses of Lloyds’ Australia

Australia-based banking firm Westpac Group has reportedly purchased Lloyds Banking Group’s Australian asset finance business, Capital Finance Australia (CFAL), and its corporate loan portfolio, BOS International Australia (BOSI), in a transaction valued at $1.45bn.

Westpac

Under the terms of the deal, which was signed in October 2013, the acquisition of Lloyds’ Australia business comprises motor vehicle finance book of $3.9bn, an equipment finance book of $2.9bn and a corporate loan portfolio of $1.6bn.

In order to boost the required capital under new law and repay the state aid Lloyds received during the financial crisis of 2008, the banking group is divesting its Australian asset finance and commercial lending units.

At the time of signing the deal, Westpac Group CEO Gail Kelly had said the acquisition would deliver benefits to shareholders and was a good strategic fit with the existing businesses of St.George and Westpac Institutional Bank (WIB).

"This is a value creating, straightforward transaction that makes both commercial and strategic sense. These are strongly performing businesses that we know well and that will expand our reach and capability in target segments," Kelly added.

Apart from providing $100m in additional cash earnings by financial year 2015, the transaction will expand the group’s capability and reach within equipment finance, create scale and geographic diversity within the group’s motor vehicle finance business.

The motor vehicle finance business will complement St.George’s existing motor vehicle finance business, while the takeover of CFAL, an operating lease specialist will enable WIB to provide a more comprehensive suite of leasing solutions to customers.

Goldman Sachs Group is providing advice to Lloyds over the sale, with senior management from Credit Suisse Group also helping the 40% government-owned UK lender.

Image: WBC headquarters in Sydney. Photo courtesy of Merbabu.