The Westpac Banking Corp (ASX: WBC) share price will be one to watch on Wednesday.
This follows the release of an update on an asset divestment.
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Why is the Westpac share price on watch?
Investors may want to keep an eye on the Westpac share price after it revealed that a planned asset sale will no longer go ahead.
According to the release, Westpac has terminated its agreement with Kina Securities Ltd (ASX: KSL) for the sale of its Pacific businesses. Kina was due to acquire Westpac Fiji and Westpac's 89.91% stake in Westpac Bank PNG for up to $420 million.
This termination follows last week's decision by Papua New Guinea's Independent Consumer and Competition Commission (ICCC) to deny authorisation for the proposed sale of Westpac Bank PNG to Kina Securities.
What now?
The banking giant notes that the Pacific businesses were classified as held for sale in its first half results. As a result, it is now expecting to reverse this with its full year results. It is also assessing whether any of the previously recognised impairments should also be reversed.
Though, how long the company holds onto these assets, only time will tell. Management advised that it plans to operate the businesses and support its Pacific customers while assessing alternate exit options. This is in line with its strategy to focus on banking in Australia and New Zealand.
What about Kina Securities?
The news is a big blow to Kina Securities' plans and also its near term revenues.
The company advised that after taking into account the costs incurred in the transaction and the loss of the expected revenue, Kina Securities now expects its FY 2021 results to only be in line with its FY 2020 results.
However, management remains positive on the future.
Commenting on the termination, Kina's Managing Director and Chief Executive Officer, Greg Pawson, said: "Whilst we are disappointed that the Acquisition has not proceeded, this in no way changes the Company's strategy of seeking both organic and inorganic growth in PNG and the Pacific Region, and the outlook for the Company remains positive."
