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Westpac to sell stake in wealth management arm to raise A$700m
[SYDNEY] Westpac Banking Corp, Australia's No.2 lender by market value, on Tuesday said it plans to cut part of its stake in its wealth management arm, helping it raise up to A$700 million (S$731.2 million) in an effort to boost its capital ratios.
Westpac will cut its holding in BT Investment Management to between 31 per cent and 40 per cent from 59 per cent now, a move that will help increase its common equity Tier-1 ratio by 10-15 basis points, it said in a statement. The Tier-1 ratio is a closely watched measure of banks' financial health.
Australia's major banks are under growing pressure to meet expected stricter capital rules amid slowing profit and credit growth and shrinking lending margins.
The Westpac move comes after National Australia Bank , the country's No.4 lender by market value, in May raised A$5.5 billion in a rights issue and third-ranked ANZ Banking Group put its car and equipment finance business on the market.
Westpac said in its statement that wealth management business will remain a "strategically important focus" for the group.
The sale will be facilitated by a fully underwritten institutional offer of 55 million shares, and a non-underwritten retail offer to existing Westpac and BT shareholders of up to 27 million shares at the same price as the institutional offer.