Westpac (ASX: WBC) is said to be the favourite to acquire Lloyds Banking Group’s Australian business, which has also received attention from other banks, including Commonwealth Bank (ASX: CBA), NAB (ASX: NAB) and Macquarie Group (ASX: MQG), according to The Australian.
The deal is worth around $10 billion and consists of a car leasing business valued at $6.5 billion and a corporate loan book. With that in mind, one senior banker has given Westpac a “90% chance of winning this deal” as the bank will be willing to pay more for the car leasing business and corporate loan book with the belief that it can integrate Lloyds’ businesses with its own.
Whilst the deal would provide potential for growth with the acquisition of the car leasing business, it would also increase the potential for growth in the corporate lending market, which has been described as ‘persistently anaemic’.
Just as ANZ (ASX: ANZ) has highlighted Asia as an area for significant growth opportunities, the acquisition of Lloyds’ business could be Westpac’s avenue for future growth.
However, shares in each of the banks have climbed substantially over the last 12 months due to investors’ search for high yielding stocks. Whilst they may continue to climb over the next few weeks or months, it seems very unlikely that the shares will deliver outstanding results over the long term.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.
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