Westpac raising capital
Dec. 9 - Westpac Banking Corp., Australia’s second-largest lender by market value, announced plans to raise A$2.5 billion in a fully underwritten share after its acquisition of St George Bank.
The bank’s stock was halted pending the sale to institutions, which is underwritten by JP Morgan, UBS, and Morgan Stanley.
The capital raising will bolster Westpac’s balance sheet and adds about 92 points to Westpac’s capital ratios and boosts Tier 1 capital to about 8.32%, it said in a statement.
The bank chose against a sale of hybrid equity securities, saying hybrid markets have become “more challenging” and the ability to replace St George Bank’s hybrids was uncertain. It also saw opportunities for corporate lending as company bonds mature and other avenues for capital dry up, it said.
The merger with St George was finalized on Dec. 1. Westpac’s performance in the first two months of the current financial year has been “sound” though with increased impairment charges including top-up provisions for Allco and ABC Learning.
Following the institutional placement, Westpac said it plans to make an offer to retail shareholders to subscribe for up to A$10,000 of ordinary shares. That offer won’t be underwritten.
Shares of Westpac last traded at A$17.88 on the ASX and have declined 22% in the past month.