Westpac has bought the Australian operations of Lloyds Banking Group for $1.45bn (£857m) in a move that is the Australian bank’s biggest deal in five years.
It marks the withdrawal of Lloyds from Australia and is part of the bailed out UK bank’s ongoing efforts to focus on its home market.
The much anticipated deal was announced as the Australian markets opened on Friday morning. The businesses being bought by Westpac were largely inherited by Lloyds after it rescued HBOS five years ago at the height of the banking crisis. The sale includes motor finance group Capital Finance Australia Ltd as well as a corporate lending business.
Westpac chief executive Gail Kelly said the deal would expand the bank's capability and reach within the equipment finance sector.
"This is a value creating, straightforward transaction that makes both commercial and strategic sense," she said. "These are strongly performing businesses that we know well and that will expand our reach and capability in target segments."
Lloyds said: "The sale is in line with the group’s strategy of focusing on the UK, rationalising its international presence and ensuring best value for shareholders.
“The sale will enable our country exit from Australia, which will be effected a short time after completion, although we will continue to support core UK-linked clients in Australia. The proceeds of the sale will be used for general corporate purposes."
The deal will allow Lloyds, which is 32%-owned by the UK taxpayer, bolster its regulatory capital ratios. The bank is expected to make a gain on the sale of £20m and bolster its capital by £550m, largely because of the lower risks being taken. It will also have to reduce its deferred tax assets by £350m.
In the past three years, Lloyds has incurred impairment charges on bad loans of about £3bn in the Australian business.
The UK government has begun to sell down its stake in Lloyds, which it bailed out five years ago, making £60m from selling off a first tranche last month.
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