Well he would say that but if that’s the main rationale for bidding for Bendigo Bank then Bank of Queensland CEO David Liddy, had better go back to the drawing board.
Mr Liddy said at theBoQ interim profit announcement that the proposed merger with Bendigo Bank Ltd is important for regional banking in Australia.
He said at the results presentation that the merger would create a new force and an alternative in the financial services banking landscape.
“A merged entity would be a strong force and we’re natural allies against the big banks. We are working to be a real force and an alternative to the big banks.”
He said the proposed merger of the two regional banks was recognition of the changing landscape of the financial services sector and he hoped due diligence could start with Bendigo Bank soon.
Surely the point of any merger is to improve returns for shareholders in both companies, not to build ‘new forces’.
For its part Bendigo Bank is busily consulting with its shareholders, many of whom live in and around the central Victoria city.
BEN doesn’t have any significantly large institutional shareholdings so it will be decided by the attitude of thousands of small customers and shareholders, most of who will look to the bank’s board for guidance. (A bit like Coles at the moment)
That’s why BEN has cleverly established a hotline to encourage letter writing and email comments from shareholders and others in the community around Bendigo about the bid from Bank of Qld and what BEN and its board should do.
“There have been some concerns raised in the past fortnight by some members of the Bendigo community, however as the merger discussions progress we believe these concerns will be allayed,” Mr Liddy said in a statement with the profit yesterday.
“We have committed to preserving Bendigo Community Bank branches. We have committed to preserving the Bendigo headquarters. We have committed to preserving the Bendigo brands. We have committed to retaining key executives and giving significant Board representation.
“If we work on the premise, and I believe most in the finance sector do, that mergers are going to occur involving the regional banks, then there is no better fit for Bendigo Bank than Bank of Queensland,” Mr Liddy said.
“For Bendigo shareholders we believe the price is extremely attractive and we believe a merged team is best-suited to understanding their culture, growing the business and has the operational and integration experience to make it work,” Mr Liddy said.
“We both understand how to run growing branch networks involving third parties, whether they are franchisees or community boards.
“I believe we have shown our skills and experience in execution and that together a combined BOQ and Bendigo Bank will be a powerhouse in the Australian retail banking market and provide greater returns to the shareholders of both companies,” he said.
Promoting the merger as the putting together of a regional player and an alternative to the big bank sounds good, but Mr Liddy and his team would be better off talking to as many smaller BEN shareholders as possible.
Yesterday’s solid interim result might be a good starting point.
BoQ reported a 21 per cent lift in first half net profit to a record $48.4 million, from $40 million in the first half of 2006. It was struck on a 24 per cent rise in revenue to $219 million thanks to a 21 per cent rise in net interest income to $154 million.
Mr Liddy said the bank was exceeding targets in its lending and deposit growth and continued to be well ahead of the banking system.
BoQ shares were 29 cents stronger at $17.59 while Bendigo Bank shares eased 16c cent to $16.90.
Interim dividend is 32c from 30c.
Accounts released with the profit show a small but worrying increase in loans in arrears past 90 days from $60.3 million in the first half of 2006 to $94.6 million in the first half of 2007.
