(Repeat for additional subscribers)
May 6 (The following statement was released by the rating agency)
Fitch Ratings says Bendigo and Adelaide Bank Limited's
(BEN, A-/Stable) ratings are unaffected by the acquisition of Rural Finance
Corporation Victoria (Rural Finance), as the bank's capital and liquidity
positions are unlikely to materially weaken as a result of the deal. At the same
time, BEN's franchise in the Victorian agriculture market will improve through
the acquisition. The AUD1.8bn transaction was announced on 5 May 2014 and is
subject to regulatory approval.
The purchase price is to be funded through a fully underwritten AUD230m
institutional share placement, an additional share purchase plan of up to AUD50m
which is not underwritten, wholesale funding, retail deposits and surplus
liquidity. Capital and liquidity positions are expected to remain robust post
acquisition, supporting BEN's ratings. Any significant weakening in BEN's
funding and liquidity positions could lead to a negative rating action as
indicated in Fitch's rating commentary dated 28 November 2013.
The acquired business and loan book will provide the bank with a larger
footprint in the Victorian agriculture market while also diversifying the bank's
agriculture exposure. The acquired loan book accounts for less than 3% of BEN's
total assets as at 31 December 2013 but will allow the bank to fast-track its
strategic franchise improvement plans. The acquired business is high-margin,
with a proven strong track record in asset quality.
Cost and revenue synergies may be possible given some location overlap, and
BEN's ability to distribute its banking products and services to Rural Finance
customers. However, BEN is committed to maintaining all non-executive staff and
the brand for at least three years.