Westpac today announced the intention to sell part of its shareholding in BT Investment Management (BTIM). DFA comments this is in part a move ahead of the tighter capital requirements which are in train and it is likely we will see other divestments across the industry as the screws are tightened.
The Westpac Group’s holding will reduce from its current 59% of BTIM’s issued capital to between 31% and 40%.
The sell-down will generate a post-tax accounting gain on sale of between $0.6 and $0.7 billion for Westpac. Westpac’s common equity Tier one capital ratio is also estimated to increase by between 10 and 15 basis points. The accounting gain will be treated as a cash earnings adjustment in Westpac’s full year 2015 accounts.
Westpac Group Chief Financial Officer, Peter King, said the transaction delivers benefits to both Westpac and BTIM.
“The sale allows the Group to realise a part of the investment in BTIM, increasing our capital ratios, while still maintaining a significant interest in BTIM.
“The strength and importance of the relationship remains unchanged. Wealth remains a strategically important focus for the Westpac Group and our continued investment in BTIM sees us maintain a stake in asset management which is a key factor in having a strong and diversified wealth business.”
Mr King said the sale is also important for BTIM shareholders.
“The transaction increases the proportion of BTIM’s shares that are readily tradable, improving liquidity and helping facilitate inclusion in key equity indices,” he said.
Westpac currently intends to retain a shareholding between 31% and 40%, with the CEO of BT Financial Group, Brad Cooper, remaining as a Non-Executive Director on the BTIM Board.
