In a move aimed at ending conjecture over its rumored Asian venture, Westpac Banking Corp, the Australian banking major raised 3 billion US dollars from the American debt markets. In the move, the Australian bank remitted to investors a margin of 93 and 115 basis points consecutively by pricing 1 billion US dollars in three year bonds and 2 billion US dollars in five year bonds.
The move marks a rate higher than the London Interbank Offer rate, subsequently instigating a positive regaining of confidence in Australian banks and their ability to take on major international investments, analysts said. According to Macquarie Securities, the bank deserved its retained Outperform rating and the firm advised customers that the international bond issue is sure sign Australian banks are capable of landing big deals at fair though higher costs.
According to other analysts, the banks offer was supportive of the Australian exchange market, performing impressively in Tuesday trading, given the fact that Westpac’s shares have underperformed its competitors of late. Westpac shares went up by 2.38% outdoing its competitors in the industry by over 1%. Even so, the Australian bank reiterated that its primary target in business will be its Australian operations, with a push ahead with its long held Asia expansion plan.
According to the company, the ongoing conjecture over its Asian plans are baseless as its Asia plans have not changed at any point and as such, the company is currently keen on developing its existing operations especially in the Australian corporate majors undertaking operations in the region. Reports had emerged that the company was planning a global strategy that would see it bolster its Asian foothold through acquisitions and organic growth.
As such, the reports said the company had hired Bain & Company, the global strategy consulting company, to help it refocus its Asian banking strategy, a fact the bank quickly denied. However, with the smallest number of overseas acquisitions as compared to its other big rivals in Australia, it remains to be seen if the speculations were pure rumors, given the fact that its rivals have an expanded foot print globally, with ANZ alone boasting a presence in 13 Asian countries and still making more acquisitions.
Westpac Banking Corporation is a multinational financial services company that transformed into the largest bank in Australia by market capitalization after it took over St. George Bank. It is also the second-largest bank in New Zealand. The bank is one of the Australian 'big four' banks, joining NAB, ANZ, and the Commonwealth Bank.
27 July 2010.