KINA Securities Ltd and Westpac Bank have terminated the agreements for Kina to buy Westpac’s Pacific businesses following the Independent Consumer and Competition Commission’s rejection of the proposal.
Kina managing director and chief executive officer Greg Pawson said while they were disappointed that the acquisition had not proceeded, “this in no way changes the company’s strategy of seeking both organic and inorganic growth in PNG and the Pacific region. And the outlook for the company remains positive”.
A Kina market announcement yesterday stated that both banks had agreed to terminate the agreements for Kina to purchase Westpac’s Pacific businesses, comprising Westpac Fiji and Westpac’s 89.91 per cent stake in Westpac Bank PNG.
It was subject to various regulatory approvals, including ICCC’s authorisation of Kina’s proposed acquisition of Westpac PNG.
It said “taking into account the costs incurred in the transaction, and the expected revenue from the acquisition, Kina expects that its full year 2021 results will now be in line with the company’s full year 2020 results”.
ICCC commissioner and chief executive officer Paulus Ain last week said that although Kina had proposed to operate Westpac as a separate bank, the ICCC was not satisfied that there would be two separate banks because of a common ownership.
Kina had filed the application on March 17.
Other reasons given include:
- THE markets are currently highly concentrated, and will remain so as long as there are few players in the markets;
- THE number of commercial banks would be reduced to two with the acquisition;
- THE barriers to entry and expansion are very high and the proposed acquisition would further heighten the barriers to entry as number of banks are reduced giving more market power to the two existing incumbents.
Ain said the ICCC was concerned that the proposed acquisition was likely to result in an increase in prices and profit margins.