Westpac eyes to expand in Asia

Australia’s second largest bank’s major play for Bank of East Asia underscores expansionist leanings.

Westpac Banking Corporation made a surprise bid for a US$400 million stake in Hong Kong’s Bank of East Asia in December, sending the clearest signal yet that Westpac is more serious about growing in Asia. Westpac has a reputation of being the most domestically focused of Australia’s Big Four banks.

While the bid for Bank of East Asia was unsuccessful, it revealed Westpac’s plan to gain a strategic, long-term shareholdings in Asian banks.

The attempt to buy into an Asian bank confirmed that Westpac was quietly looking at investment opportunities in Asia in 2012, including small-scale acquisitions in banking and wealth management.

Analysts believe Westpac’s interest in Bank of East Asia was a way to gain insight into the Asian banking market over the long term. There was no plan to take over Bank of East Asia, according to sources.

Bank of East Asia issued 111 million new shares in December for US$400 million to fund it expansion in mainland China and shore-up its capital base. Japan’s Sumitomo Mitsui Financial Group doubled its existing stake in Bank of East Asia to 9.5% after its successful buy-in.