18 December 2008

Proposed Acquisition of Bank of Western Australia and St Andrew's by the Commonwealth Bank of Australia

Today I am announcing approval, with conditions, of the proposed acquisition of the Bank of Western Australia (BankWest) and St. Andrew's by the Commonwealth Bank of Australia, in accordance with the Financial Sector (Shareholdings) Act 1998.

I have taken this decision after a comprehensive assessment of its impact on the national interest, with conditions that support a strong and competitive Australian banking system.

These conditions will also ensure the best possible outcomes for both customers and employees of CBA and BankWest. In particular, CBA is required to maintain and grow the BankWest brand as well as provide support for staff affected by the acquisition.

CBA is required to maintain BankWest's head office and core functions in Western Australia, and CBA and BankWest branches and business centres in Western Australia are not permitted to close as a consequence of the acquisition.

Importantly, CBA is also required to remove fees for CBA customers using BankWest ATMs, and vice versa, from 3 March 2009.

In addition to maintaining a strong and competitive banking system, and protecting the interests of customers and employees, this decision takes into account a range of other important considerations including prudential requirements, economic efficiency and community banking needs.

The decision also takes account of the detailed assessments of the Australian Competition and Consumer Commission, the Australian Prudential Regulation Authority and the Treasury.

The proposed acquisition of BankWest by CBA removes uncertainty over the future of BankWest and has helped instil more confidence in the Australian financial system.

The merged entity will have a larger balance sheet and stronger capital position, as well as broader access to funding markets leaving it better placed to withstand further challenges from the global financial crisis.

The BankWest brand will also benefit from CBA's lower funding costs, helping it to offer lower interest rates on loans.

Attachment A

Conditions Attached to Approval Under the
Financial Sector (Shareholdings) Act 1998 of the
Proposed Acquisition of the Bank of Western Australia by the Commonwealth Bank of Australia

The conditions to which this approval is subject are that:

For a period of at least three years after the date of acquisition:

  1. CBA will maintain and grow the BankWest brand;
  2. foreign ATM fees for CBA customers using BankWest ATMs and vice versa will be removed from 3 March 2009;

In addition, for the period of integration under the acquisition process:

  1. CBA will maintain BankWest's head office, Managing Director and core functions in Western Australia and in accordance with the Bank of Western Australia Act 1995;
  2. CBA and BankWest branches and business centres in Western Australia will not close as a consequence of the acquisition;
  3. CBA will maximise internal redeployment opportunities available for affected staff, support external job placement where employee redundancies occur, and ensure that staff affected by the acquisition have timely access to their full entitlements under CBA or BankWest (as applicable) retrenchment arrangements;
  4. CBA will work through the implications for employees as quickly and sensitively as possible, in consultation with employees, the Finance Sector Union and other affected stakeholders; and
  5. CBA will provide specialist resources to assist staff affected by the acquisition.

Force Majeure

The Commonwealth Bank of Australia (CBA) will not be liable for any failure to perform any obligation imposed by these conditions if the failure is due to Force Majeure.

If CBA is by reason of Force Majeure unable to perform an obligation under these conditions, CBA will, as soon as practicable and in any event within 30 days, notify the Treasurer, specifying:

  1. the cause and extent of non‑performance;
  2. the date of commencement of Force Majeure;
  3. the means proposed to be adopted to remedy or abate the Force Majeure;

and will use all reasonable diligence and employ all reasonable means to remedy or abate the Force Majeure as expeditiously as possible.

Force Majeure means:

  1. any act of God;
  2. war, revolution, or any other unlawful act against public order or authority;
  3. an industrial dispute; or
  4. a governmental restraint.

CBA will give written notice to the Treasurer of the following matters as soon as practicable and in any event within 30 days after the relevant occurrence:

  1. the effective date; and
  2. the commencement and termination or abatement of the Force Majeure.