Westpac sinks Lloyds takeover

The acquisitive moves by Lloyds TSB for the Trust Bank of New Zealand have been sunk by Westpac Banking Corporation of Australia in a shock NZ$1.27bn (pounds 600m) agreed takeover yesterday.

Westpac's last-minute takeover of Trust Bank, which stunned analysts, will create New Zealand's largest banking group.

The move is a severe setback to the ambitions of Lloyds TSB in that region.

The Lloyds takeover of Trust Bank would itself have have created New Zealand's largest bank.

The announcement that it has been pipped at the post by Westpac may now lead Lloyds to dispose of its assets in New Zealand, some banking analysts said yesterday.

However, the blow may also lead to Lloyds turning its sights firmly back on the UK market and could even lead to a further acquisition in this country, possibly financed by a disposal.

Trust Bank said that under the agreement with Westpac, its shareholders would receive NZ$2.92 for each of its current shares, or one Westpac share plus cash for every four Trust Bank shares. Trust Bank will also pay a bonus of seven cents a share, worth a total of NZ$31.3m, to shareholders.

Westpac managing director Bob Joss said that some job losses and branch closures within the combined operation were inevitable. The two banks employ 7,000 full-time staff in New Zealand.

Harry Price, head of Westpac's operations in New Zealand, will run the combined bank. He said: "It is inevitable there will be some branch closures, redeployment of staff and some redundancies. There are 100 or more places where we are over the road from each other in terms of banking operations."

But he expected many of the cuts to come out of non-replacement of staff who leave. Attrition alone should be enough, he added.