Bendigo acquires Bank of Cyprus
Bendigo and Adelaide Bank (BEN) will acquire the local subsidiary of Bank of Cyprus, Bank of Cyprus Australia, for around $140 million.
Bendigo has announced an equity raising including $120 million fully underwritten placement, as well as a write-down of $95 million of goodwill associated with Bendigo's wealth division.
This will impact statutory earnings but not regulatory capital position or cash earnings, Bendigo stated. Bendigo expected the acquisition to be earnings and return-on-equity accretive following integration.
The purchase strategically complements the broader Bendigo network, according to Bendigo and Adelaide Bank chairman Robert Johansen.
"The business aligns closely with the cultural and strategic values of BEN, and its performance is a reflection of high customer advocacy and an excellent track record of direct community engagement," he said.
The equity raising is available to selected institutional investors at $8.45 per share. Retail shareholders will have the opportunity to participate in a non-underwritten share placement plan early next year, according to Bendigo.
Bendigo and Adelaide Bank group managing director Mike Hurst said the group's margin lending business continues to suffer in the tough global banking environment.
"We remain convinced that margin loans are appropriate products, with a legitimate place in the investment portfolios of many of our customers," he said.
"However, the impairment testing required under current accounting standards is prescriptive about how this goodwill should be accounted for, and we have therefore made this decision. Ironically, this write-down will provide a moderate boost to our ongoing return on equity," he said.
UBS and Freehills are advising Bendigo on the transaction.
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