By Nick Stride
Friday 8th August 2003
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Accountant Phil Verry acknowledged the $6 billion asking price wouldn't be easy to find but said a sale to New Zealand owners was a better option for Lloyds than sale to an Australian bank.
Black Horse Holdings (BHH), the vehicle of Mr Verry and his son Martin, has written to Lloyds asking to be included among sale participants. The frontrunners are thought to be ANZ, Commonwealth Bank of Australia, London-based HSBC and Westpac.
Investment bankers reacted with amusement. "Good luck to them," one said.
BHH is looking for a "partnering funding bank" and has suggested Lloyds itself might like to take on the role. It is approaching four "primary targets," all non-Australian banks.
Mr Verry said the bid need not necessarily be 100% debt-funded. "That depends on the position Lloyds wants to take."
BHH was looking to establish what each party's position was to identify the options.
Its bid would provide Lloyds with "an early cash-out" and would be followed by a partial public float in recognition of the fact the market is not big enough to absorb a full float.
Mr Verry said the history of bank mergers showed they almost inevitably destroyed value.
If an Australian bank bought National it would have to close up to half of the combined branches to concentrate a greater volume of business over a lower overhead base, leading to loss of market share.
Because of that necessity Australian banks would have to factor into their bids a discount. The BHH bid would not.
Meanwhile, Westpac said it was assessing institutional investor interest in a placement of hybrid securities, following a $A850 million capitalraising last week by CBA.
The moves led to speculation the banks were positioning themselves to fund a National Bank bid.
Banking analysts said it was also possible they were simply taking advantage of low interest rates.
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