CBA-Colonial deal peps up listing talk

By RICHARD BRADDELL

WELLINGTON - Commonwealth Bank of Australia may join Westpac and ANZ in seeking a New Zealand sharemarket listing once it completes its takeover of Colonial in five or six months.

CBA is the 75 per cent parent of ASB Bank. The chief financial officer of CBA, Michael Ullmer, said: "It would be foolish to rule it out ... these are the sorts of things that we continually evaluate and we need now to add to that evaluation that Colonial will be in there."

The merger will be effected through the exchange of seven CBA shares for every 20 Colonial shares. This values the 27.3 million Colonial shares held by New Zealanders at more than $270 million.

Colonial shares jumped 40 per cent as the merger was revealed and are expected to be in more demand.

Both Colonial and CBA have abnormally strong retail investor bases and the substantial increase in size is expected to put pressure on institutions to buy CBA stock to maintain or build index weightings.

To help manage demand, CBA and Colonial intend to set up a special facility into which Colonial shareholders can sell ahead of the merger if they wish.

While primarily aimed at easing the transition for institutions, it will be available to Australian retail investors and possibly those in New Zealand.

Mr Ullmer said these were details that would be worked out over the coming months.

In New Zealand, the merger will create a group with banking and financial services assets of about $20 billion. Its importance to CBA demanded that the local integration was handled well, Mr Ullmer said.

Locally, CBA has to decide how to integrate Colonial with ASB Bank and its financial services subsidiary Sovereign, which in many ways mirrors Colonial.

Mr Ullmer said that now the Colonial board had unanimously endorsed the transaction, work was being done at a high level on the best way to handle the issues.