Westpac approaches St George over merger

Westpac Banking Corporation has approached St George Bank about a proposed merger between the two companies.

St George told the Australian stock exchange on Monday that Westpac had approached it after close of business on Friday.

Both banks on Monday morning asked for trading halts in their shares to allow confidential discussions to continue and for an announcement to be made, possibly within 24 hours.

In a statement, Westpac said the respective brands would be better able to compete and flourish by belonging to the same larger, stronger entity.

"Both organisations are strong businesses, with iconic brands, strong and highly complementary cultures and long track records of delivering for customers, employees, shareholders and the community," it said.

Under the potential merger, all Westpac and St George brands, including Bank SA, and branch/ATM networks would be retained.

"The focus will be on investing more in front-line services," Westpac said.

Westpac chief executive Gail Kelly said the merger was a unique opportunity to bring the brands together in a way that would benefit both banks and their customers.

"It would create Australia's leading financial institution with regard to meeting customer needs, distribution, strong brands, scale, financial strength and the best products," Mrs Kelly said.

"For customers, it would make it more convenient to access customer touchpoints, including the largest distribution network with over 1,200 branches and in-stores as well as more than 2,700 ATMs. It would also provide greater diversity and choice of products from both organisations."

The all-script merger would require the approval of a range of regulatory authorities as well as the Federal Treasurer, Wayne Swan.

The combined business would be the largest wealth platform provider with funds under administration of $108 billion and would also be Australia's leading provider of home lending, with a market share of 25 per cent.

Westpac has engaged Caliburn Partnership as financial adviser and Gilbert + Tobin as legal adviser.

The nation's fifth largest bank, St George, expects that a further announcement will be made prior to the commencement of trading on May 13, 2008.

Meanwhile, the union representing bank workers says merger talks should be called off to protect thousands of jobs.

The proposed merger was bad for workers, consumers and the industry, the Finance Sector Union said.

"Bank mergers lead to job losses," union national secretary Leon Carter said.

"Thirty thousand Australian bank workers from St George and Westpac have come into work this Monday morning to face an uncertain future.

"Takeover talks must be called off immediately."

Westpac said in a statement it did not intend a "net reduction in branch or ATM numbers".

But the union says the merger will lead to fewer branches and fewer jobs.

"It is absurd to think you'll have a St George Bank and a Westpac bank beside each other, when they're looking at the cost savings from a merger," union national policy officer Rod Masson told AAP.