The Westpac Banking Corp (ASX: WBC) share price will be one to watch on Tuesday.
This follows the release of a disappointing update on a proposed asset sale after the market close.
What did Westpac announce?
Late last year Westpac announced an agreement with Kina Securities Ltd (ASX: KSL) for the sale of the bank’s Pacific businesses for up to $420 million. These comprise Westpac Fiji and Westpac’s 89.91% stake in Westpac Bank PNG.
Westpac decided to offload the businesses as part of its strategic decision to focus on consumer, business, and institutional banking in Australia and New Zealand.
Westpac’s Group Chief Executive of Specialist Businesses & Group Strategy, Jason Yetton, explained: “We are taking another step in becoming a simpler, stronger bank while ensuring a high standard of banking services is maintained for our Pacific customers, as well as providing new opportunities for our people.”
“Choosing the right purchaser for our businesses is important to us, our people and the communities we serve. We are pleased our Pacific businesses are being acquired by Kina Bank. Kina is a strong brand in the region and is well positioned with deep local knowledge to continue to help our consumer and business customers succeed,” Mr Yetton added.
However, things haven’t gone quite to plan, unfortunately.
What’s the latest?
This afternoon Westpac revealed that the sale still requires regulatory approvals in both Fiji and Papua New Guinea.
One of those approvals is from Papua New Guinea’s Independent Consumer and Competition Commission (ICCC). However, the ICCC has just released its draft determination indicating that it proposes to deny authorisation to Kina Bank for the proposed acquisition of Westpac’s stake in Westpac Bank PNG.
Westpac and Kina are currently reviewing the draft determination and intend to make further submissions to the ICCC before its final determination is issued in September.
Australia’s oldest bank believes the sale is the interests of Westpac’s customers and staff and the people of Papua New Guinea and Fiji.
It notes that Kina is committed to financial inclusion and innovation, plans to retain all local staff and branches, and intends to maintain two brands in PNG.