Bank merger will provoke wails

IF THE Westpac/St George merger proceeds, Gail Kelly will head Australia's largest bank. Questions now are being raised as to whether Kelly's job history leaves her, and Westpac, in a sticky legal situation.

Westpac intends to keep St George as a distinct entity within the Westpac group – a strategy to keep St George's customers and shareholders on side by maintaining its brand identity and branch network, while still seeking savings by merging back office operations and saving on funding costs.

It is a credible strategy. Westpac has surplus back office, especially mortgage processing, capacity. And the sub-prime crisis has increased the cost of funding for single-A rated St George far more than it has for the double-A rated Westpac. Westpac is highly confident the merged entity would retain Westpac's higher rating and thus enjoy its much lower cost of funds.

Courier Mail | Ross Buckley | May 15, 2008


THE Finance Sector Union officials fear that up to 2000 jobs could be lost at the St George Bank's Montgomery Street, Kogarah, operations under the bank's proposed merger with Westpac.

And Kogarah Councillor John Mikelsons said it could led to the closing of the bank's Montgomery Street premises altogether, causing a disastrous flow-on effect for local businesses.

The FSU meet staff yesterday to discuss the implications of the merger with the union's national director for campaigning and bargaining, Chris Gambian saying the union is expecting significant reductions of staffing levels.

"There are a number of concerns with the merger, first and foremost the impact it will have on jobs in the bank's Kogarah operations,'' he said.

"The back office area is of particular concern. Back office functions include workers in mortgage processing, call centres, collections, cheques, anything that is not in the bank's branches.

"This area will have some duplication between the two banks.

"Montgomery Street, Kogarah, is under severe risk where there are 2000 people working in that area.

"If they take a couple of thousand workers out of the area it will have an enormous impact on the community and local business.


The Leader | 20 May 08


FINANCE Sector Union officials originally booked a meeting with Kogarah Chamber of Commerce to talk about the outsourcing of jobs at St George Bank.

But by the time the meeting date arrived, there was a bigger issue at stake the proposed merger of St George and Westpac.

FSU official Chris Gambian told the chamber the union was bracing for significant staff reductions at the bank's Montgomery Street, Kogarah, headquarters if the merger went ahead.

St George Bank chief executive Paul Fegan has said a merger would increase opportunties for staff but also admitted jobs would be lost.

"The reality is there will be some job losses but ...we have no specific detail,'' Mr Fegan said.

Between 2000 and 3000 people work at the bank's Kogarah branch and any major reduction in the workforce would have a significant impact on Kogarah's economy.

So when the union asked the chamber to support its "Save the Dragon'' campaign, it got a unanimous vote in favour.

"Westpac has said it would maintain a St George corporate identity at Kogarah, but we don't believe it,'' Mr Gambian said.

"This is not a merger, it's a takeover. At the end of the process, everyone will be holding Westpac shares. The history of similar takeovers indicates that eventually the St George brand will be phased out.

"Over time it won't make any sense to have a Westpac and St George branch in the same suburb and the bigger brand will prevail.

"It happened to Bank of Melbourne, despite what Westpac said at the time and it will happen to St George.''

Mr Gambian said that if the merger went ahead the new group would have 30,000 employees. Industry analysts predict that 5000 of these jobs could be cut.

"The first jobs to be affected would be back office functions workers in call centres, processing and support jobs, mortgage processing and collections,'' he said.

St George Bank chief executive Paul Fegan has said a merger would increase opportunties for staff but also admitted jobs would be lost.

"The reality is there will be some job losses but ... we have no specific detail.''

Despite that, Mr Gambian said the union believed the fight to stop the merger could be won on competition grounds.

"This is not a done deal, but it will be a hard fight,'' he said.

But he urged members to remember the Qantas private equity bid and the sale of the Snowy River hydro electric scheme. Both of these projects had fallen over because of community disapproval.

Mr Gambian urged members to write to the Treasurer Wayne Swan, who will have the final say in whether the merger proceeds.

St George supports the merger, which puts a value of about $18 billion on the bank. The NSW-based bank's backing was considered essential by Westpac, as 60 per cent of St George investors are small retail shareholders.