Westpac buys BT, but Martin to leave

TheWestpac Bankhas confirmed today that it will pay $900 million to buy theBT Financial Groupfrom its US parent, the Principal Financial Group, in a move that will see BT chief executive Ian Martin, chief investment officer Gary Symons and chief operating officer Graeme Fowler leave the funds management business.

Peter Martin, the chief executive ofSagitta Rothschild Wealth Management, which Westpac purchased for $323 million only four months ago, will also leave the bank under a reorganised group structure to allow for the integration of BT.

The announcement, which ends a week of press speculation about Westpac’s intentions for BT, will make Westpac the fourth largest retail funds manager in the country with more than $30 billion of funds under management.

Westpac group executive of wealth management David Clarke said today the acquisition of BT met the bank’s previously stated ambition to add a market leading investment platform to its list of products.

BT’s wrap platform, with $6.5 billion under administration, is one of the largest wrap account products in the country.

“We acquired [Rothschild] to obtain a rated asset management capability and access to the external financial advisor network. However, as we stated at the time, it did not address our need for a more functional and scalable administration platform for both the retail market and for corporate superannuation,” Clarke says.

As well as BT’s wrap business, the deal announced today will result in Westpac acquiring BT’s distribution, margin lending and corporate superannuation businesses, as well as part of its investment management capabilities.

The Iowa based Principal group, which paid $2.1 billion for BT in 1999, will keep BT’s property trusts and direct property management capabilities. Principal will also continue to manage the international equity and fixed interest funds acquired by Westpac from BT.

As part of the integration of BT, Westpac’s wealth management business will be re-structured into four separate business units - an asset accumulation business, an investment management business, a life insurance business and the group’s New Zealand business.

Rob Coombe, head of retail at BT, will head the asset accumulation business, including responsibility over all investment products, distribution, the BT Wrap, corporate superannuation and margin lending.

Guy Strapp, currently managing director of investments at Sagitta Rothschild, will head the investment management unit, while the current head of BT Financial Group in New Zealand, Craig Stobo, will head the New Zealand wealth management business.

All three will report to David Clarke, who up until now managed Westpac’s consumer and business banking operations.

A statement released by Principal today says Ian Martin, Symons and Fowler will leave BT to pursue other opportunities.

A statement released by Westpac says Peter Martin, who negotiated the sale of Rothschild to the bank, will leave the group within the next few months.

According to reports, Sagitta Rothschild, which changed its name from Rothschild Australia Asset Management only last month, will change its branding once again to operate under the BT banner.