Westpac boosts capital with AGC sale and share buy-back

westpac/wealth-management-business/ACCC/chief-executive-officer/

9 May 2002
| By Fiona Moore |

Westpac’splan to sell its consumer finance business AGC to GE Capital for $1.65 billion has been approved by theAustralian Competition and Consumer Commission(ACCC), just as Westpac has announced an on-market buy-back of a maximum of 48.5 million shares.

It is believed that both the sale of AGC and the share buy-back will provide Westpac with additional capital to potentially realise its stated strategy to grow its wealth management business.

According to Westpac chief executive officer David Morgan, the sale of AGC will improve the overall risk profile of its book.

“Importantly, the minimum profit on the sale of $750 million will provide us with additional degrees of freedom in terms of strategic growth options and capital management,” he says.

Morgan says Westpac can use the money from the AGC sale in one of four ways — reinvest in organic growth; growth by acquisition; pass it on to the shareholders in the form of a dividend; or to use a combination of these three uses.

The ACCC approval follow the announcement of Westpac’s proposal to sell AGC back in November last year.

The ACCC found that the proposed acquisition was likely to have little effect on the state of competition in the business finance and car finance markets and that in-store credit, also a service provided by both sides of the deal, was assessed to be just one of a number of payment options available to consumers.

Westpac announced its half yearly results last week which recorded its first billion-dollar half year result, with a 7 per cent growth in revenue. The overall result was a 14 per cent increase in core earnings.

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