The Commonwealth Bank (CBA) says it will buy Australia's largest wholesale bank, BankWest from cash strapped parent British Bank HBOS for AU $2 billion.
This is just a few months after BankWest announced plans to roll out 100's of bank branches in NSW and QLD to consolidate its position in these markets. At the time it was noted that they would not be able to find suitable retail space in a then bouyant retail sector.
The Commonwealth Bank will pay more than $2 billion for BankWest and its wealth management business, St Andrews Australia.
The Commonwealth Bank says it will raise the $2 billion by selling shares to institutional investors to fund the deal.
The CBA also says it has held high level discussions with Queensland's Suncorp which wants to sell its banking business.
The purchase of BankWest will allow the CBA to expand its presence in the lucrative Western Australian market, which is being driven the the region's resource boom.
There are fears that the takeover will result in job losses.
BankWest has an extensive network of branches in WA and last year launched a program to open 160 branches nationwide.
It also has call centres and other administrative operations based in Western Australia.
According to Mr Mortgage the CBA will have to deal with relatively small losses as a result of the US financial crisis, including a $100 million loss as a result of its exposure to collapsed US investment bank, Lehman Brothers.
