Race to buy National Bank gets serious

By PAULA OLIVER and AGENCIES

The pretenders have been weeded out of the race to buy the National Bank, and those left in the hunt are about to be unmasked.

The bank, put on the market by its London owner, Lloyds TSB, has drawn the attention of all of Australia's big banks and other overseas banks such as HSBC.

It is understood that the sale process has now reached a point where it has thinned out the potential buyers and left only the serious ones, who are lining up to carry out due diligence.

Sources are divided about who is on the shortlist.

Local market gossip is focused on ANZ, Westpac and HSBC.

The Commonwealth Bank of Australia, owner of ASB, has also been tipped as a potential buyer.

CBA this week increased speculation that it was preparing to buy the National Bank when it launched a debt issue that will raise up to $1 billion.

But the latest word in New Zealand and Australia is that CBA has fallen out of the race.

CBA has refused to comment.

Sources suggest that final, binding bids for the National Bank will be due next month.

Most banks would require Commerce Commission clearance to go ahead with the transaction, and applications are expected to begin arriving at the competition watchdog's office within days.

A spokeswoman for the commission said yesterday that public announcements would be made when applications were received.

A key component of the commission's decision will be how it chooses to define the markets in which the National Bank operates.

The spokeswoman said the commission would not reveal how it intended to view the markets until it had reached its final clearance decision.

A purchase of the National Bank, a leading rural and home loan lender, is likely to raise competition hurdles for Westpac - and possibly others.

ANZ is so far the only bidder to have declared its hand in the process.

The bank's New Zealand managing director, Greg Camm, described the National Bank as a "terrific bank", and said ANZ would be interested at the right price.

"It's a really good bank and we've got great admiration for it," he said.

"It has a strong brand, good people, good management and a good earnings performance."

Camm said ANZ hoped to get the go-ahead to start due diligence within a fortnight.

Westpac is being more coy.

A local spokesman said yesterday the bank did not want to add to speculation, but was keeping an eye on the sale process.

At an analysts' briefing in Australia yesterday, Westpac chief executive David Morgan said his bank did not need to acquire customers.

It had made three regional banking acquisitions since 1995, and another two significant purchases last year.

But he said that all significant financial asset opportunities that came up in Westpac's geographical area would be examined "in a disciplined way".