Westpac Group has announced the sale of its businesses to Kina Securities Limited (ASX:KSL) (Kina Bank) for up to $420 million.
These are Westpac Fiji and Westpac’s 89.91% stake in Westpac Bank PNG Limited.
According to Westpac Group Chief Executive, Specialist Businesses & Group Strategy Jason Yetton, the sale follows the decision of the group to focus on business, consumer, and institutional banking in New Zealand and Australia.
“We are taking another step in becoming a simpler, stronger bank while ensuring a high standard of banking services is maintained for our Pacific customers, as well as providing new opportunities for our people,” he said. “Choosing the right purchaser for our businesses is important to us, our people and the communities we serve. We are pleased our Pacific businesses are being acquired by Kina Bank. Kina is a strong brand in the region and is well-positioned with deep local knowledge to continue to help our consumer and business customers succeed.”
The sale price consists of $315 million payable at completion and $60 million paid six-monthly over the following 18 months for Westpac PNG. The sale price is also composed of earn-out payments of up to $45 million scheduled to happen yearly over 24 months after completion and are subject to the business performance of Westpac Fiji.
It is also expected that an accounting loss on the sale of an estimate of $230 million will happen - which includes a foreign currency translation reserve (FCTR) loss based on exchange rate on completion.
Completion is expected to happen in the Second Half of FY 2021 and is also subject to regulatory approval in PNG and Fiji and a Kina Bank shareholder approval.
