is bankwest next

HALIFAX Bank of Scotland is believed to be reviewing the future of its Bankwest subsidiary after coming under severe business pressure in Britain.
Sources told BusinessDaily yesterday that Perth-based Bankwest could be put up for sale if HBOS's British operations continued to be crunched by rising funding costs and loan defaults.

An auction of Bankwest would provide a possible strategic solution for one of the local juggernauts, National Australia Bank, ANZ or Commonwealth Bank, which are prevented from merging with each other.

The ban, known as the Four Pillars policy, was reaffirmed yesterday by Federal Treasurer Wayne Swan.

Local merger speculation has intensified in the past month following Westpac's $19 billion move on St George.

HBOS is proceeding with 4 billion pound rights issue to shore up its capital position, which has taken a beating this year.

The group's London-listed scrip has lost more than half of its value in the past six months and slumped to a 10-year low last night of 370 pence.

"They are under pressure like all UK banks at the moment and the conjecture is that the Australian banking arm would be sold at the right price," a British banking source told BusinessDaily.

"Bankwest has begun to pull out of lease deals on properties which had been earmarked for new branches in Victoria and NSW - the parent simply can't afford it any more."

The speculation surrounding Bankwest came as Mr Swan, in a key statement, said the ban on mergers between the four major banks was here to stay.

The affirmation of the policy eliminates any prospect of NAB or CBA being able to bid for ANZ.

Mr Swan told parliament that the merger ban had contributed to the stability of the Australian banking system in the global liquidity crisis.

"These are banks which have performed as well as, or better than, any banks in the world during an exceptionally difficult period," Mr Swan told parliament.

"Quite apart from the need to sustain competition in the banking market, I would not be at all comfortable if the soundness of our banking system depended not on the strength and risk management skills of four banks, but on the strength and risk management skills of a lesser number."

The Treasurer's robust defence of the four pillars policy may prompt NAB to mount a rival bid for St George or Bankwest if it becomes available.

A Westpac/St George merger will need to be approved by regulators including the Australian Competition and Consumer Commission and by the Treasurer.

"We will review the facts which emerge from this scrutiny, and make our decision on those facts," Mr Swan said. "Whatever may be the outcome of the banking merger now under consideration, this government sees no case for changing the four pillars policy which has served Australia well."
The major banks have argued that a dismantling of the merger ban is a prerequisite for establishing Australia as a leading financial services centre in Asia.

Mr Swan did not address this claim, but suggested local banks could continue to grow as financial markets expanded in the region.

Bank stocks were among the worst performers on the stock market yesterday amid renewed concern that the global liquidity crisis would continue to drive up funding costs.