MELBOURNE, Australia--Westpac Banking Group Ltd. (WBC.AU) has moved to offload its stake in BT Investment Management Ltd. (BTT.AU), initially offering a large chunk of the fund manager to investors before eventually selling the rest.
About a 19% stake in BT will be sold to institutional investors this week, potentially raising as much as 645 million Australian dollars (US$482.3 million) for the big Australian bank and cutting its interest in BT to 10%.
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The sale is expected to lift Westpac's main capital ratio at a time when regulators are pushing banks to increase buffers against the risk of future crises and ahead of a newly announced tax on liabilities that is set to be applied from July.
Westpac said Wednesday it would offer 60 million shares in BT at a price of between A$10.25 and A$10.75 each, a discount of as much as 16% to the last closing price. The transaction is expected to be settled on Friday.
The bank added it aimed to sell the remaining 10% in BT in the future, although not ahead of the release of BT's fiscal 2018 first-half results next May.
Westpac said the bank no longer needed to retain its shareholding in BT after the investment firm's expansion outside of Australia and the bank's wholly-owned BT Financial Group wealth management division has focused on providing wealth products through other platforms.
Westpac bought BT Financial Group in 2002, and folded its investment management and Rothschild Asset Management operations into the business. The investment management arm was spun off and listed in 2007 as BT Investment Management, a Westpac-controlled company that four years later expanded offshore with the acquisition of London-based boutique equity manager JO Hambro Capital management. In mid-2015, Westpac reduced its holding in BT from 59% to 31% with the sale of shares at A$8.20 each.
Westpac said the sale of shares this week was expected to add about 0.1 percentage point to its common equity Tier 1 capital ratio, and the accounting gain would be disclosed with its full-year results in November.
Early this week, the bank said it expected a surprise tax, announced earlier in the month with the federal budget, would likely cost about A$370 million a year. It added no decision had been made on how to respond to the levy, although if it was borne just by its shareholders it would represent a cut of over 4% to the last annual dividend paid.
Aimed at helping it bring its budget back into balance, the federal government said it expected to raise up to A$1.6 billion a year with a 0.015% quarterly tax on the liabilities of the countries largest five banks, targeting corporate bonds, certificates of deposits and Tier 2 capital.
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(END) Dow Jones Newswires
May 24, 2017 04:16 ET (08:16 GMT)