Australia's biggest bank is set to become even bigger after Commonwealth Bank of Australia agreed to buy Bank of Western Australia from its financially troubledBritish parent HBOS for $2.1billion.
CBA will fund the acquisition by selling $2 billion worth of new shares to institutional investors through a share placement.
The takeover, which included wealth management business St Andrew's Australia, was conditional on all necessary competition, regulatory and government approvals, CBA said yesterday.
St Andrew's, which provides life insurance and wealth management products, will be integrated into CBA's existing businesses.
CBA chief executive Ralph Norris said the BankWest takeover had been made possible by the global banking and credit crisis.
''Rarely have we seen a quality asset such as BankWest become available on such attractive terms,'' Mr Norris said in Sydney.
''The parent was in some difficulties in the UK and we saw the opportunity to make an acquisition that ... 12 months ago, would not have been possible.''
Mr Norris said the takeover would add to CBA's profits. CBA, already the nation's biggest home-loan lender, will increase its market share to 28per cent and will be larger than the combined Westpac Banking Corporation-St George Bank, which will have a 24 per cent share.
CBA's share of Australian household deposits will increase to 34 per cent as it increases its customer numbers to around 11 million.
A combined Westpac-St George will have about 22 per cent of deposits, according to figures from the Australian Prudential Regulation Authority.
CBA will also gain the biggest market share in Western Australia, which is enjoying among the highest economic growth rates in the country because of the mining boom.
''It's certainly a cheap deal as they were paying book value and there are synergies to come,'' Austock Securities analyst John Buonaccorsi said.
Mr Buonaccorsi said CBA paid about 11 times the price to earnings ratio for BankWest, which was cheaper than the bank's own trading multiple.
CBA shares were suspended from trading on Tuesday ahead of the BankWest takeover and share placement, which CBA chief financial officer David Craig said was likely to close last night.
CBA last traded at $45.15.
For HBOS the sale of BankWest will provide much-needed cash.
HBOS is being taken over by Lloyds TSB Bank to prevent its collapse and will create Britain's biggest bank in a deal worth 12 billion ($A29.6billion).
CBA said it would maintain the BankWest and Commonwealth brands side by side in Western Australia.
CBA also said it had ''high level, exploratory discussions'' with Queensland-based bank Suncorp-Metway.
Mr Norris said the BankWest takeover had a good chance of being approved by the Australian Competition and Consumer Commission.
However, consumer advocate organisation Choice said the takeover would seriously erode competition in the banking sector. AAP
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