By KEVIN TAYLOR
Westpac's purchase of BT Financial Group will create New Zealand's fifth-largest funds manager.
The deal, announced yesterday, in which Westpac buys BT's New Zealand and Australian operations for $1.05 billion (A$900 million), will make the Australian bank the fourth-largest retail funds manager in that country.
About 200 of 2000
jobs will go in the deal, but Westpac expects most to be met by attrition and all job losses to be in Australia.
The deal is expected to be completed by the end of October.
The combined WestpacTrust/BT operation will have $3.54 billion of funds under management in New Zealand.
WestpacTrust at present has $1.8 billion under management, mostly in retail funds.
BT New Zealand has about $1.7 billion under management, with $1.1 billion in the wholesale arena.
The combined wealth management business will have 75,000 customers in New Zealand and 1 million in Australia.
The sale includes a provision for an extra payment to BT's owner, US company Principal Financial Group, of up to $174 million (A$150 million) contingent upon exceeding retail fund targets by the end of 2004.
Westpac chief executive Dr David Morgan said the deal would provide the bank with a quantum leap in distribution, reach, client servicing capabilities, and scale to deliver accelerated growth in wealth management.
The bank believed that significant financial assets in Australia and New Zealand were "not in the hands of their long-term natural owner", he said.
The purchase fitted the gap in Westpac's wealth management operations "like a glove".
Morgan said that in terms of rankings there was not a lot of material difference between third, fourth and fifth in New Zealand.
Mike Pratt, group executive of Westpac's New Zealand and Pacific operations, said the deal represented a big step forward in the way that WestpacTrust helped its customers to achieve their wealth aspirations.
BT New Zealand chief executive Craig Stobo will head the combined New Zealand wealth-management business.
Westpac chief financial officer Phil Chronican said no new capital was needed to pay for the purchase.
He said the bank hoped it would have to make the extra payment to Principal.
"It will signal that the acquisition has been an even greater success than we are currently planning."
David Clarke was named group executive of wealth management, having previously managed Westpac's consumer and business bank.
The enlarged wealth-management operation will be restructured into asset accumulation, investment management, life insurance, and a New Zealand business.
The deal is subject to regulatory approvals.
Westpac's New Zealand class shares rose 15c to $17.45 yesterday.
By KEVIN TAYLOR
Westpac's purchase of BT Financial Group will create New Zealand's fifth-largest funds manager.
The deal, announced yesterday, in which Westpac buys BT's New Zealand and Australian operations for $1.05 billion (A$900 million), will make the Australian bank the fourth-largest retail funds manager in that country.
About 200 of 2000
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