ANZ shares suspended ahead of National Bank sale announcement

10.00am

UPDATE - Lloyds Bank would make an announcement on the sale of the National Bank of New Zealand today, sources told NZPA.

ANZ Bank, strongly speculated as the purchaser of the country's largest bank, shares have been suspended this morning "pending an announcement".

Further evidence that ANZ was the purchaser was that its chief executive John McFarlane was in Wellington today despite the fact that the Melbourne-headquartered bank has it result announcement today.

Asked why he was in Wellington, he told NZPA: "I'm here on business."

He repeated that comment when asked if ANZ was about to announce the purchase of the National Bank.

The selling price is expected to be around $6.5 billion and the merger would make ANZ by far the largest bank in New Zealand.

ANZ banks later essentially confirmed the purchase when it said it was holding a news conference "regarding the National Bank" at 1pm in Wellington today.

The conference was being attended by Mr McFarlane, ANZ New Zealand chairman Roderick Deane, National Bank chairman Wilson Whineray and its chief executive Sir John Anderson.

The acquisition would lift ANZ's share of the banking market to close 36 per cent from 16 per cent -- the third largest of the major banks.

ANZ received Commerce Commission approval to buy National last month.

ANZ, whose shares closed yesterday at A$18.30 ($21.26), is expected to make a large cash issue, possibly as big as A$1.5 billion-2 billion, to pay for the purchase.

It became the last man standing in the protracting bidding process for National -- with other contenders such as Westpac and Commonwealth Bank of Australia withdrawing from the race along the way.

ANZ is scheduled to announce a rise in net profit for the year to September 30 of around A$2.3 billion.

The speculated price being paid by ANZ is at the top end of analysts' expectations.

There has been strong speculation ANZ would dump its own poorly perceived brand in New Zealand and retain the well respected National brand.

When it bought the Postbank in the late 1980s it retained the brand for a few years before quietly dumping it. Westpac has reverted to its brand after temporarily branding itself WestpacTrust in the wake of its TrustBank purchase.

Reuters reported an ANZ source said last night it would pay $6.5 billion for the bank.

Lloyds TSB, Britain's fifth biggest bank, is shedding overseas businesses as it tries to revive its United Kingdom retail banking operations.

The bank agreed to sell almost all its Brazilian assets to British rival HSBC Holdings on October 9 for US$815 million ($1.36 billion) and sold its French wealth management business to UBS AG in May. HSBC was also speculated as a possible purchaser of National but later said it was not pursuing it.

ANZ, Australia's third largest bank, will use proceeds of a recent tier one fund raising and cash from the US$1.3 billion sale of Grindlays to Standard Chartered in 2000 to finance the purchase of National, the source said.

ANZ is reported to have the financing in place for the deal and that a rights issue which has been rumoured as a possible funding source for the deal is not expected.

The Reserve Bank must agree any deal.

National first-half pre-tax profit rose 34 per cent to $416 million, or 8.8 per cent of Lloyds TSB's pre-tax profit, on strong growth in mortgages and business banking, Lloyds TSB said in August.

- NZPA