HSBC eyeing regional banks?

While Australia's Big Four banks are banned from merging and the ACCC would oppose any attempt by one of them to buy a regional bank, an acquisition of a regional by a foreign-owned bank is not unlikely.

St George Bank and the Bank of Queensland will most probably find themselves the targets, and the predator could well be HSBC. Originally the Hong Kong and Shanghai Banking Corporation until a name change in 1998, HSBC is now domiciled in the UK, and is the wealthiest foreign operator in Australia. It entered this country in 1985, along with 16 other foreign banks, and has been the most successful and active.

However, St George and BoQ may not fit the usual pattern of HSBC acquisitions: HSBC executives say that the bank's culture emphasises paying low prices for assets; typically it buys companies in distress, then turns them around. It also focuses on high net worth individuals, of which neither St George nor BoQ has many. But HSBC has said it will look at any opportunity – and St George's articles of association expire at the end of this month.

As the ACCC would oppose any Australian bank's purchase of St George or BoQ, it could well be a foreign-owned bank that buys one or both of them. Either or both would not be a large acquisition for HSBC, despite St George's relatively high price tag. It would only be a question of whether HSBC wanted them. BoQ is currently capitalised at $467 million at yesterday's share price, while St George is capitalised at $961 million.

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