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July 24, 2014 | 08:42 PM
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18.05.2008Westpac says Gail Kelly a 'great asset'

Westpac Banking Corp chairman Ted Evans says that chief executive Gail Kelly is a "great asset" as the company attempts to buy rival St George Bank Ltd.

But Mr Evans said on ABC's Inside Business program that Westpac's management hadn't considered the possibility of the takeover when they approached Ms Kelly, who was then chief executive of St George.

Rather, her ability to improve customer service at St George, Australia's fifth biggest bank, had been the main reason why Westpac had chosen her as the new chief executive, Mr Evans said.

Ms Kelly's presence "gives us a lot of confidence in executing the takeover," said Mr Evans, who personally offered her the chief executive's role.

"The integration of the two (banks) will go on for a couple of years. It will help so much the she will be leading."

The St George board accepted a $19 billion friendly takeover offer by Australia's third biggest bank Westpac on May 13, and the banks entered two weeks of exclusive talks.

St George has left the door open for more bids once the two week period is up.

Mr Evans said Westpac had approached St George with a lower offer, but had raised it during talks with St George.

Westpac's offer was compelling because of the operating model the bank offered, where a separate St George brand will be maintained, Mr Evans said.

But, he didn't rule out raising the offer further if another bank made a bid.

Mr Evans said Westpac's attempt to take over St George would not have been possible if not for the disruptions in international financial markets, which meant it would be difficult for St George to compete with its bigger rivals.

"We've always been interested in St George but we couldn't afford it before," he said.

"The world has changed. St George couldn't afford to continue the way they had been operating ... with the cost of funds for them compared with us."

Mr Evans said the premium to borrow money for three years for St George, which has an A credit rating, compared with Westpac, which has a AA credit rating, had risen to over 40 basis points from three basis points before the credit crisis.

"It won't stay over 40 forever but it will not go back to three. It went to three because the international financial markets frankly were asleep, and not looking enough at credit worthiness," he said.



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