Insurance News: 21 Jan 2010
A MEETING of the AMP board this month mapped out options for the wealth manager if, as is widely expected, National Australia Bank buys AXA Asia Pacific...
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One of these is a defence strategy aimed at ensuring that AMP remains the so-called ''fifth pillar'' of the nation's financial services market if a big-four bank begins circling.
The logical ''poison pill'' in any takeover attempt would be for AMP to turn the game on its head and make a play for a regional bank. Such a move would result in AMP becoming too large for a big-four bank to digest both in terms of pricing and likely competition hurdles.
The aim of the banks over the past decade has been to diversify into wealth management, so it should not be too much of a stretch for a wealth manager to buy into a mid-sized bank.
Among targets, the most obvious for AMP would be Bank of Queensland, given the regional lender's willingness to enter into a partnership.
At the same time, a deal is affordable and BoQ's share registry is largely wide open.
Other candidates include the banking arm of Suncorp-Metway, although new chief executive Patrick Snowball has recently said he is keen to retain the business, which is largely focused on the Queensland market. Bendigo and Adelaide Bank, while attractive and with a national footprint, is regarded as less likely given cultural difference.
AMP is no stranger to lending and transaction accounts, having operated a small banking business for the past two decades. More recently, AMP chief executive Craig Dunn has talked up a greater strategic focus on its banking business to position itself as a alternative to the big-four lenders.
Of the eight non-executive directors on AMP's board, three, including chairman Peter Mason and director Paul Fegan, have banking backgrounds.
When it comes to AMP, ANZ is widely regarded as the best placed to make a takeover offer. Any deal would transform ANZ into a dominant player in the financial services market. However, it would come at a cost.
On Axiome Equities' calculation, ANZ would have to pay about $16.5 billion for AMP for the acquisition to be mildly dilutive, but this would mostly be financed by a huge $10 billion capital raising.
SOURCE: the Age
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