I am announcing today my approval under the Financial Sector (Shareholdings) Act 1998 to the proposed acquisition of Colonial Limited by the Commonwealth Bank of Australia (CBA).
This means that I am satisfied the acquisition is in the national interest taking into account advice from the Australian Prudential Regulation Authority (APRA) ,the findings of the Australian Competition and Consumer Commission (ACCC) inquiry into the proposed acquisition, as well as undertakings the CBA made to the Commonwealth when seeking approval.
APRA has advised that the proposed acquisition raises no significant prudential concerns.
The ACCC has indicated that the anti-competitive effect of the acquisition that it had identified can be effectively remedied through the various court enforceable undertakings that the CBA has made to the ACCC under section 87B of the Trade Practices Act 1974. These undertakings, which are summarised at Attachment A, will have the effect of enhancing competition in the retail banking markets of Tasmania and rural NSW as well as minimising the ability of the CBA to exercise market power in those markets.
The CBA made various undertakings to the Commonwealth in seeking approval for the acquisition of Colonial. In particular, the CBA undertook: to retain Colonial State Bank sites where there is no CBA branch within close proximity; in any country town where the CBA or Colonial is the last bank in the town, the branch will be retained for at least the next five years; and, in country towns, any amalgamated branch will be retained for at least five years. Furthermore, the CBA undertook to ensure that there will be no involuntary employment losses in Tasmania and rural and regional NSW as a result of the acquisition of Colonial. In fact, there will be a net increase in employment in Tasmania.
I have accepted the CBAs undertakings and made them conditions of the approval under the Financial sector (Shareholdings) Act 1998 (FSSA). These conditions are at Attachment B.
The proposed acquisition will have broader national benefits by creating a stronger and more diversified financial institution with scope to generate greater operational efficiencies, lower cost services and more diverse products for consumers.
Approval of the proposed acquisition under the FSSA will also be made conditional upon the agreement of the shareholders of Colonial Limited to the proposal and the endorsement of the relevant schemes of arrangement.