Westpac Asset Sale To raise $150m

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By Chris Shaw

Westpac Banking Corporation (WBC) has decided it is better to focus on its core operations, the bank announcing the sale of its sub-custody business in Australia and New Zealand.

The bank has agreed to sell the operations, which have assets under custody of about $300bn, to the Hong Kong and Shanghai Banking Corporation Limited (HSBC) for $150m.

In management’s view the sub-custody business is more effective when run as an operation with global scale and given this was never the bank’s objective, it makes more sense to exit now and put the proceeds into operations where it can maintain a competitive advantage.

There is unlikely to be any substantial impact on the bank’s earnings for the 2006 financial year as a result of the sale, which should be finalised by the end of August. Thomson One Analytics shows the median profit forecast for the bank for financial year ending September 30 is $3,104m, while the median price target for the stock is $23.83.

According to the FN Arena database the average price target for the bank is $24.28, which compares to a last closing sale of $22.40.

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