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Friday, 22 August 2008

Westpac may icrease bid for St George

18/05/2008 7:20:00 PM.  | James Cregan with AAP

Westpac may increase its bid for St George amid speculation its rivals are preparing a counter-bid for Australia's fifth largest bank.

Westpac is offering almost $18 billion for the "happy dragon" - a deal which the St George board has accepted.

Westpac says its bid is compelling, and would be surprised if either the National Australia Bank or Commonwealth made a counter-offer.

Westpac Banking Corp chairman Ted Evans says that chief executive Gail Kelly is a "great asset" as the company attempts to buy rival St George Bank Ltd.

Ms Kelly's presence "gives us a lot of confidence in executing the takeover," said Mr Evans, who personally offered her the chief executive's role.

"The integration of the two (banks) will go on for a couple of years. It will help so much the she will be leading."

Mr Evans said Westpac's attempt to take over St George would not have been possible if not for the disruptions in international financial markets, which meant it would be difficult for St George to compete with its bigger rivals.

"We've always been interested in St George but we couldn't afford it before," he said.

"The world has changed. St George couldn't afford to continue the way they had been operating ... with the cost of funds for them compared with us."

Mr Evans said the premium to borrow money for three years for St George, which has an A credit rating, compared with Westpac, which has a AA credit rating, had risen to over 40 basis points from three basis points before the credit crisis.

"It won't stay over 40 forever but it will not go back to three. It went to three because the international financial markets frankly were asleep, and not looking enough at credit worthiness," he said.

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