Westpac has agreed to buy Lloyds Banking Group’s Australian asset finance business, CFAL, and its corporate loan portfolio, BOSI, for US$1.45 billion.
According to Westpac, the transaction will deliver approximately US$100 million in additional cash earnings by financial year 2015.
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The additional benefits from the transaction will include: expanding the group’s capability and reach within equipment finance; building scale and geographic diversity within the group’s motor vehicle finance business; and deepening customer relationships with the opportunity to cross sell other Westpac Group products.
Westpac said that CFAL’s motor vehicle finance and equipment finance business has total receivables of US$6.8 billion across 213,000 consumer and commercial customers.
The motor vehicle finance business will complement St.George’s existing motor vehicle finance business given CFAL’s business features regional and rural Australia, while St.George’s business will be focused on metropolitan areas.
CFAL’s equipment finance business specializes in the leasing of large trucks, construction and earth moving equipment and office and computer equipment. The acquisition of CFAL will enable Westpac Institutional Bank (WIB) to provide a more comprehensive suite of leasing solutions to customers.
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By GlobalDataThe transaction is not subject to regulatory approvals and is expected to be completed on 31 December 2013.
Gail Kelly, CEO of Westpac Group, said: "The acquisition would deliver benefits to shareholders and was a good strategic fit with the existing businesses of St.George and WIB. Our strong capital position has allowed us to expand our business without having to raise additional equity."
