Sale boosts trust donation pool

By GEOFF SENESCALL

Auckland and Northland communities stand to get at least an extra $30 million a year in donations as a result of the ASB Bank Community Trust's decision to quit its holding in the bank.

The prediction by the trust chairwoman, Judith Bassett, follows the $560 million sale yesterday of its remaining 25 per cent stake in the ASB Group to the Commonwealth Bank of Australia, which now owns 100 per cent.

A further $60 million loan will be paid back by the bank, giving the trust a total nest egg of $1.09 billion.

This will make it New Zealand's largest community trust.

The deal effectively values ASB Group, this country's fifth-largest lender, at more than $2.2 billion. It was valued at $336 million some 10 years ago when the trust first sold its holding.

The decision by the trust to sell its stake comes after being faced with having to dip into its coffers to help fund the bank's expansion plans.

Earlier this year, Commonwealth Bank spent $A9 billion to buy the insurer Colonial, which has a substantial New Zealand operation and required the trust to stump up an estimated $125 million.

Judith Bassett said that the trust did not want to reduce its capacity to make donations.

"It was much more sensible to sell the holding for a fair price and to build that into a fund rather than to keep on committing our capital to financial services," she said. "The ASB has been a wonderful growth investment but this seemed to be an occasion to rethink our priorities."

Judith Bassett said the trust's intention was to invest the $620 million from the sale into its existing diversified fund, which is run through its advisers Frank Russell and Co.

Last year, the trust paid out $35.5 million in donations of which $29.7 million came from cash invested in the fund by the ASB Charitable Trust.

"Provided the demand exists we could now easily double our donations," she said.

The trust distributes funds to a range of community social services as well as for recreation activities and to schools.

In the 10 years since the trust sold 75 per cent of the ASB Bank to Commonwealth Bank for $252 million, to create the ASB Charitable Trust, it has increased the trust's funds to $470 million.

At the same time, the trusts have distributed $230 million in donations to the Auckland and Northland regions.

The ownership of the Auckland bank was vested in the ASB Bank Community Trust in May 1988 as a result of the legislative restructuring of trustee banks.

ASB's managing director, Ralph Norris, said: "While our direct ties with the ASB Trusts have come to an end, as longstanding partners in the Auckland and Northland communities I have no doubt we will continue to work closely together for the betterment of a wide range of people and projects."

Both the trusts would retain their ASB names, Mr Norris said.

"Both the trusts and ASB Group will continue their support and sponsorship of community projects and events, as well as sport and the arts." He also said that the purchase paved the way integrating the group's financial services subsidiary Sovereign with Commonwealth Bank subsidiary Colonial.