Westpac’s St George Bank focuses on small business market

In a bid to grow its market share in the small business lending sector, St George Bank, which is owned by Westpac (ASX: WBC), yesterday opened up its first “business hub” to offer free office space for startups.

Although growth in lending in the sector is currently only around 1% per year, St George’s CEO George Frazis believes that demand for credit is approaching a “tipping point”, whereby the level of growth per year could increase to 5%.

Frazis said “there’s no doubt that the election was a big step forward in terms of confidence and we are just starting to see that confidence come through.”

To take advantage of this growth, St George plans to open a hub in each state and will hire 50 business bankers and make an additional $2 billion of funding available to small businesses.

However, the introduction of 50 new positions could be offset by Westpac’s plan to cut 65 assistant bank manager jobs across 71 branches. It was also revealed that ANZ (ASX: ANZ) had been planning on offshoring 590 jobs, although the bank has reconsidered its move and will keep the positions local.

Foolish takeaway

St George’s object is to become “the leading business bank for small business” — a goal that would be beneficial for Westpac, which currently holds the lowest share of the business lending market of any of the big four banks with just 15.5%. In comparison, National Australia Bank (ASX: NAB) controls 24.1%.

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

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