C. B. A. expects bid worth at least $365M

Press, 2 May 1981, Page 19

C. B. A. expects bid worth at least $365M

The Commercial Bank of Australia. Ltd is on the verge of receiving a friendly takeover offer worth at least $365M from another Australian l?ank, in a move that has astonished the business community. The first indication of the take-over — which would leave Australia with only five major trading banks — came when the directors of the CBA announced that the bank had “received proposals which could lead to its merger with another Australian bank.” The directors continued: “Shareholders are advised not to sell their shares pending clarification of the position. The CBA will issue a further statement as soon as possible.” The CBA’s potential suitor has not come forward publicly, and several banks were tipped last night as the likely one. The Australia and New Zealand Banking Group. Ltd, was thought the most likely, but the Bank of NSW and the National Bank of Australasia, Ltd, were also favoured. Sir lan McLennan, the

chairman of the ANZ. refused to comment about speculation that his. bank would bid for the CBA, and an ANZ director, Mr Laurie Muir, said he was unable to comment. Executives of both the Bank of NSW and the National Bank said they had no knowledge of any proposed merger with'the CBA. It is believed that the proposal involves a one-for-one share swap take-over. The CBA was capitalised at S2BSM on the Sydney Stock Exchange just before the news. On a one-for-one basis, a bid for the CBA's 67M shares from the ANZ would value the CBA at $394M. The Banking Act limits shareholdings in Australian banks to a maximum of 10 per cent, and consequently any take-over would require the approval of the Gover 7 nor-General, who would act on the advice of the Treasurer (Mr Howard). However, it is not certain that the Government would readily approve the merger. The CBA's announcement comes just before the final

report of the Campbell inquiry into the Australian financial system. me inquiry is expected to recommend that foreign banks be fully licensed to operate in Australia. The expected arrival of these giants provides a rationale for this proposed merger, as it would create an organisation with sufficient financial clout to combat the foreigners locally. It is possible that the Government may use the Banking Act to halt the merger at least until the recommendations of the Campbell inquiry are announced. The Commercial Banking Company of Sydney, Ltd, was also considered a likely partner for the CBA. However, the managing director of the CBC (Mr Vic Martin) said that his bank was not involved. He expressed surprise that the CBA’s silent suitor had not identified itself. This is the second time since 1970 that the CBA has been involved in merger discussions: in 1970. when the ANZ merged with the English. Scottish and Australian

Bank, the CBA had merger discussions with the Bank of NSW. but nothing came of these discussions. The CBA is the fourthlargest bank in Australia, and the fifth-largest in New Zealand: it has close to 700 branches and agencies in both countries. The CBA was established in 1866. acquired the Australian and European Bank of Melbourne in 1879, and in the next decade absorbed the Town and Country Bank of Adelaide and the Mercantile Bank of Sydney. ■ However, the bank went into liquidation in 1893 as a result of the Victorian land boom crash. The bank was reconstructed but ordinary shareholders had to wait until 1921 for a dividend. The National Bank of Tasmania was purchased in 1918. The CBA acquired General Credits, Ltd in 1956. Its savings bank subsidiary. The Commercial Savings Bank of Australia. Ltd. was incorporated in 1962 and commenced operations in July. The Commercial Bank Savings Bank <NZ). Ltd, began operations in 1964.