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ANZ to buy National Bank for $A4.9B


Friday 24th October 2003

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ANZ Bank said today it would buy the National Bank of New Zealand for $A4.915 billion ($NZ5.71 billion).

The purchase of National, owned by Britain's Lloyds TSB Bank, will make ANZ New Zealand's largest bank.

The purchase price excludes a $NZ575 million dividend to be paid to Lloyds.

The Reserve Bank said it had conditionally consented to the purchase.

All the top brass of both banks are gathered in Wellington for a news conference later today.

ANZ said it was inviting National Bank chief executive Sir John Anderson to head the merged entity.

It said it was aiming at savings of $A110 million per year within three years as a result of merging the two banks.

ANZ simultaneously announced it had made a September year net profit of $A2.3 billion.

It said it would raise $A3.6 billion in a rights issue to fund the purchase.

ANZ said it would maintain the National brand alongside the ANZ brand "for the foreseeable" future.

The purchase price was nearly $800 million less than analysts had speculated Lloyds would get. It is 11.2 times National's adjusted June year after-tax net profit.

Other likely purchasers such as Westpac, HSBC and Commonwealth Bank of Australia earlier pulled out of the race to buy, hinting the asking price was too high.

The National Bank was already the country's largest bank with assets with around 20% market share, against ANZ's 16%.

ANZ received Commerce Commission approval to buy National last month.

Its shares, were suspended ahead of the announcement, closed yesterday at $A18.30 ($NZ21.26).

While running the two brands, ANZ said it had not yet decided on a new name for the merged New Zealand unit.

Rural operations, where National is by far the stronger operator, will be totally run under the National brand.

Greg Camm, ANZ's current managing director, would continue to manage the ANZ-branded operations of ANZ New Zealand.

The head office would be in Wellington. Recently, ANZ moved its head office to Auckland. Senior management would be located in both cities.

ANZ said it would work together with National "to complete a very different acquisition - one based on customer satisfaction and growth by retaining the best of both banks".

It said no material change was expected to the total number of branches in New Zealand - about 300 branches.

ANZ may consider seeking a listing of an amalgamated ANZ (NZ) and National on the New Zealand stock exchange with ANZ maintaining a substantial majority shareholding.

ANZ group chief executive John McFarlane said the takeover would create the leading bank in New Zealand, and one of New Zealand's leading companies.

He said the bank's focus would on improving customer service, satisfaction and growth by using the strengths of both companies.

"The acquisition is not reliant on cost savings from branch closures and no financial benefit from this has been assumed."

"It means running our business in New Zealand more like a partnership with The National Bank and minimising change for customers."

ANZ has held discussions with the Reserve Bank regarding issues raised by the central bank relating to the importance of the New Zealand banking system remaining independent.

Sir John said ANZ anticipated working with the Reserve Bank to assist it in developing prudential safeguards.

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