Kina Securities Ltd's attempt to purchase Westpac PNG Ltd was denied by the Independent Consumer and Competition Commission (ICCC) (Westpac).
After going through the ICCC Act's procedures, ICCC commissioner and chief executive officer Paulus Ain verified this.
On March 17, Kina Securities submitted an application to purchase 89.91 per cent of Westpac.
“The outcomes and the findings were based on financial information provided and gathered by the ICCC,” he said.
“The ICCC has now made the final determination to decline the authorisation sought by Kina Bank.”
Despite Kina Securities' proposal to run Westpac as a distinct bank, he said the ICCC was not convinced there would be two independent banks because of a similar ownership structure.
Other justifications include:
- Markets are now extremely concentrated and will continue to be so as long as there are few participants in the market.
- With the transaction, the number of commercial banks will be decreased to two.
- The planned purchase would raise the hurdles to entrance and expansion even higher, since the number of banks would be decreased, giving the two current incumbents more market dominance.
“The ICCC is concerned that the proposed acquisition is likely to result in prices and profit margins increase,” he said.
“Although Westpac has decided to divest its PNG business, it appeared that this would not immediately happen without the proposed acquisition proceeding.
“Hence the ICCC considered that Westpac PNG would not be a significant source of competition for at least several years.”
Kina Securities and Westpac were contacted for comment but did not respond.
Reference: Mauludu, Shirley. The National (14 September 2021). “ICCC Rejects Kina’s Bid”.
