Westpac in ‘aggressive pursuit’ for Lloyds’ Australian operations

In an effort to cut costs and strengthen its balance sheet, Britain’s Lloyds Banking Group is reportedly aiming to reduce its international branches from 14 countries to less than 10 by 2014 with the sale of its core operations as well as a separate auction for its Murray portfolio – which consists of ‘a dozen soured loans’.

The Australian Financial Review stated that Westpac  (ASX: WBC), along with rival National Australia Bank (ASX: NAB), are thought to be the keenest of the big four whilst Macquarie Group  (ASX: MQG) is also quite interested in the acquisition, which is said to be worth around $8 billion. The acquisition would increase the potential for growth in the corporate lending market, which is ‘persistently anaemic’.

Whilst it is the big four as well as Macquarie Group that are striving for Lloyds’ core operations, Macquarie is the only group also gunning for the Murray Portfolio. After narrowly missing out on Suncorp’s (ASX: SUN) $1.6 billion soured loan book, the bank is thought to be fighting hard to acquire the portfolio, which would give it access to $350 million worth of corporate loans.

International corporations such as Oaktree Capital, Apollo Global Management and KKR are also involved in the bidding war for the portfolio.

Foolish takeaway

There are limited growth opportunities in the existing market, and such acquisitions would open up opportunities for growth for the successful bidders. Whilst ANZ (ASX: ANZ) is involved in the bidding war for Lloyds’ core operations, it is also heavily focused on growth opportunities in Asia so the acquisition may not be as important as it is to its competitors.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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