Bendigo and Adelaide Bank (BEN) has announced that it has reached agreement with the Bank of Cyprus Group to acquire its 100 per cent owned Australian subsidiary, Bank of Cyprus Australia Limited (BOCAL).
BOCAL is a bank focused on the Greek and Cypriot communities through a network of 14 branches based in New South Wales, Victoria and South Australia with interest bearing assets of A$1.4 billion. BOCAL is the largest Hellenic bank in Australia with a strong track record of growth driven by successful community engagement and customer satisfaction.
Bendigo and Adelaide Bank Chairman, Robert Johanson, said the purchase of BOCAL provided a strategically complementary addition to the broader BEN network.
“The business aligns closely with the cultural and strategic values of BEN, and its performance is a reflection of high customer advocacy and an excellent track record of direct community engagement,” Mr Johanson said.
Bendigo and Adelaide Bank Group Managing Director, Mike Hirst, said there were good growth opportunities for the business through access to BEN’s broader product offering, further targeted branch expansion, and the removal of growth constraints currently being imposed on the business.
“BOCAL is an attractive business with a strong capital and liquidity position,” Mr Hirst said.
“It is predominantly funded by retail deposits, maintains a conservative risk profile with 99pc of the loan book secured against property, and has an excellent credit history. BEN is confident that there is significant scope to improve the earnings of the business through funding and operational synergies.”
Equity raising
BEN is undertaking a fully underwritten A$120m share placement to selected institutional investors at a price of A$8.45 per share. In addition, retail shareholders will have the opportunity to participate in a non-underwritten share purchase plan (SPP) early in 2012. The proceeds from the capital raising will support the acquisition funding.
“The proceeds of the raising will strengthen BEN’s capital base and provide us with flexibility to grow, particularly with the benefit of our improved credit rating,” Mr Hirst said in reference to S&P’s upgrade of BEN’s long-term credit rating from BBB+ to A- on 6 December 2011. Now all global credit rating agencies have assigned BEN with a long term issuer rating of at least an equivalent ‘A-‘ rating.
Trading in BEN shares on the ASX will be halted for one day while the share placement is being undertaken. Trading is expected to recommence on Monday, 19 December 2011 following the announcement of the outcome of the share placement. The placement shares will rank equally with all existing fully paid ordinary shares in the capital of BEN.
Following the institutional placement, BEN will offer eligible shareholders the opportunity to participate in a non-underwritten SPP. The SPP will provide eligible ordinary shareholders (being those persons registered as ordinary shareholders as at 7pm (EDST) on 15 December 2011 who reside in Australia or New Zealand) with the opportunity to subscribe for new BEN ordinary shares. Further details of the SPP will be provided to eligible shareholders in due course.
If the acquisition of BOCAL does not proceed, the proceeds from the equity raising will be used to strengthen BEN’s capital base, and provide it with increased flexibility for future growth.
