Case Study Analysis: Merger of Westpac and Bank of Melbourne

Essay by tokyoferretUniversity, Bachelor'sB, February 2007

download word file, 8 pages 5.0

1Executive Summary

This report is a strategic evaluation of the merger between the Westpac Banking Corporation (Westpac) and the Bank of Melbourne (BML) that occurred 23 November 1998.

The history of the Australian Banking Industry is examined, with explanations on government controls and regulation that characterised the industry before deregulation. The current environment of the financial industry is also covered, outlining the context within which the financial players operate.

Key decisions and motivating factors of the Bank of Melbourne (BML) and the Westpac Banking Corporation are discussed and strategically evaluated.

The authorisation and the merger are evaluated, and the position that Westpac holds seven years after the merger is examined.

The Westpac Banking Corporation operates successfully today, and are reporting excellent financial growth, backed by industry awards for corporate governance and social responsibility.

2The Australian Banking Industry


The Australian Banking Industry has traditionally been characterised by tight government control and regulations.

Following the federal government initiated Campbell Inquiry in 1982, the controlling government took significant steps to deregulate the banking industry. The aim was to dramatically restructure the industry and increase competition between financial intermediaries (Dow, D. 2000), and extend the products and services offered by banks. Following deregulation, there was increased merger and acquisition activity, particularly between the four major banks who sought to expand quickly and aggressively gain market share. Building societies and credit unions also proliferated and held a significant percentage of the industry share.

2.2Current Environment

The "four pillars policy" is a government control designed to prevent the mergers between the four major banks in Australia; the National Bank, the ANZ Banking Group, the Commonwealth Bank and Westpac Banking Corporation. The policy stipulates that no mergers will be permitted unless there is evidence of increased competition.

The Australian Banking Industry can be considered as a...