Great to see SGB being taken out by WBC. IMHO, the REAL reason...

Great to see SGB being taken out by WBC.
IMHO, the REAL reason is that SGB has zip capital compared to the loan book refinance needs and with credit markets still being in a state of no man's land, the SGB board had a major risk of keeping the business running smoothly and funding the loan book with such a tight capital base. The speed by which the SGB board accepts an offer is evidence that the problems within SGB are serious. That is fractional banking for you. Works well when securitisation market is liquid and pumping, but slaughters you when the credit markets go into reverse.

SGB takeover represents the aussie ramification of the credit market seizures.

SGB was the weakest of the bigger banks and it's ability to efficiently finance the loan books in the future was in my humble opinion, diminished by the credit crisis. Sure they could scrape by and keep refinancing the book but the costs of doing it were and still are putting intolerable pressure on the bank's margins. Being the weakest means they pay the most for refinancing. Seen what has been happening to Libor in the last month?

Gail Kelly at SGB was the unknowing architect of the problem and now she is using WBC's superior capital position to grab the SGB assets into a vehicle which can properly manage the expanded loan book with adequate capital.
Good one Gail. You have done a great service to SGB shareholders and the Australian banking sector - more so than many will ever understand.

Good outcome for everybody.
Thanks Westpac. Go straight to the top of the class.