ACCC to review Westpac’s bid for Lloyds

It was revealed yesterday that Macquarie Group (ASX: MQG) was officially out of the race to acquire Lloyds Banking Group’s Australian assets, leaving Westpac (ASX: WBC) as the last remaining bidder, however, the deal will need to gain approval from the competition watchdog before it can proceed.

Westpac has been very interested in acquiring Lloyds’ motor vehicle leasing business, Capital Finance, as well as a portfolio of loans which, combined, is said to be worth $8 billion. However, given that Westpac’s St George Bank already controls 25% of the leasing finance market and Capital Finance maintains a 20% share, the Australian Competition and Consumer Commission (ACCC) will need to review the effect that the potential acquisition would have on the market.

Originally, the deal had attracted strong interest from others in the finance industry, including NAB (ASX: NAB), ANZ (ASX: ANZ) and Commonwealth Bank (ASX: CBA), signaling that the big four banks may begin exploring potential acquisitions to open opportunities for growth.

The deal would be Westpac’s biggest acquisition since 2008, when the bank purchased St George for $18.5 billion.

Foolish takeaway

Whilst it is expected that Westpac will report an annual profit of $7.1 billion next month, Lloyds’ Australian assets would provide Westpac with an avenue for further growth.

However, regardless of whether the acquisition proves to be successful, shares in Westpac – like each of the other major banks – are currently overpriced and are very unlikely to deliver market-beating returns in the long-run.

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

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