Westpac Pacific Businesses’ Sale Collapses, Shares Fall

Shares of Westpac Banking Corp. declined on Wednesday following major selling in Wall Street overnight, which saw the big four banks logged losses and the Australian lender’s decision to call off selling its Pacific businesses due to regulatory issues in Papua New Guinea (PNG).

Westpac’s stock was trading 1.47% lower at A$20.74, with Morgans Financial Ltd. analysts having an ‘add’ rating and a $22.58 price target on the bank’s shares.

For fiscal year 2024, the broker estimated fully franked dividend at $1.47 or a 7.00% dividend yield for investors and about a 15.00% total return.

Australia’s equity benchmark S&P/ASX 200 also slipped 0.77% to A$6,890.20.

Westpac’s Failed Sale and Future Plans

Westpac announced on Wednesday that it had abandoned the sales process of its Fiji and PNG operations, ending a protracted transaction troubled by regulatory problems.

The Sydney-based company stated it had difficulty finding an alternative buyer for the two businesses after PNG’s Independent Consumer and Competition Commission (ICCC) rejected its proposed arrangement with Kina Securities Ltd.

Westpac has been aiming to exit the Pacific for years. In 2021, it established an A$420 million ($264.77 million) divestment deal with Kina Securities Ltd., but it was met with opposition from the regulator.

The block led to complications in the bank’s planned separation, raising concerns about higher operational costs and inherent risks if Westpac failed to part with its Pacific operations. As a result, the company kept its Westpac Fiji and Westpac Bank PNG businesses.

Still, Westpac Institutional Bank chief executive Anthony Miller said they would begin a new brand campaign in the coming months in Fiji and Papua New Guinea to bolster its local market position.

The bank has also provided a positive perspective on growth and its post-COVID rebound and is considering operational investments.

Moreover, Westpac vowed to continue helping local businesses, advance digital and service faculties for clients, and carry out crucial community programs on financial education and literacy.