Bank merger on not-so-distant horizon

The proposed merger between Adelaide Bank and Bendigo Bank may be finalised before the end of the year now the Australian Competition and Consumer Commission (ACCC) has confirmed it does not intend to oppose the arrangement, according to the banks’ respective managing directors.

The ACCC’s statement comes just one month after the banks, both of which reported record profits for the 2006-07 financial year, announced their intention to merge and less than a week after they completed the necessary due diligence forms.

If successful, the merger would create a bank with a market value of about $4 billion, placing it well within the S&P/ASX 100 index. It would have about $7 billion in funds under advice and management, more than 380 branches and 1.3 million customers nationwide.

Bendigo managing director Rob Hunt said both banks hoped the merger would get the final go-ahead by the end of the year and that their boards and management teams had already begun to prepare for this.

“We are confident this merger will provide a strong, diversified and vibrant banking alternative.”

Adelaide Bank managing director Jamie McPhee said the next step in the scheme of arrangement is to invite its shareholders to vote on the proposed merger “sometime in November”.

The banks hope the proposed merger will have its final court hearing before the end of the year.

Community bank Bendigo’s decision to merge with Adelaide Bank follows its rejection in April this year of a conditional proposal by the Bank of Queensland to acquire it.

Bendigo chairman Robert Johanson said at the time the board did not believe the proposed acquisition provided sufficient value to shareholders as it had excellent prospects on a stand-alone basis.