Standard & Poor’s Ratings Services (S&P) has removed St George Bank from ‘CreditWatch’, raising its ratings to ‘AA/A-1+’ from ‘A+/A-1’ after shareholders approved St George’s merger with Westpac Banking Corp.
Ninety-five per cent of St George shareholders approved the proposed merger at a Share Scheme Meeting held yesterday in Sydney.
The bank’s chairman, John Curtis, said in his remarks prior to the vote that St George’s board was conscious of market volatility in financial institutions and credit markets globally and that it was inevitable St George would eventually be taken over by one of the large banks.
He said if the merger with Westpac did not proceed, St George’s share price was likely to take a substantial tumble from its current levels and that staying independent was likely to “deliver less value over the medium term”.
S&P anticipates that within one to two years, St George and Westpac will be operating as a single authorised deposit-taking institution, which will result in costs savings for the institutions.
Despite such expectations, Curtis emphasised Westpac’s commitment to retaining St George’s brand. “We are very pleased that under the proposal, the St George brand and branch network will be maintained, along with a corporate presence in Kogarah [St George’s headquarters],” Curtis said in a group statement to the Australian Securities Exchange.
Before the vote, Curtis admitted there would be job losses as a result of the merger, primarily in the “back-office and head office functions”, but said the merger “is about retention and the growth of the St George culture both inside St George and Westpac”.
The schemes are scheduled for implementation on December 1, 2008.
