ELDERS Rural Bank (ERB) has stated it is business as usual despite a $2.5 billion bid by the Bank of

24 Apr, 2007 08:45 PM

According to ERB chief executive officer Paul Hutchin-son, the rural lender had a proven track record over the past six years and he did not expect merger negotiations to affect business.

³The compound effect of very solid asset and liability growth and profitability over a number of years means the bank¹s future is very strong,² Mr Hutchinson said.

³There has been no concern whatsoever from our staff and customers¹ point of view.²

ERB posted an interim profit result of $16.4 million for the first six months of the cuRrent financial year.

The half-year profit compares to a corresponding result of $13.2m in the first half of the 2006 financial year.

Mr Hutchinson attributed the profit increase to the ongoing growth of ERB, driven by its customers adopting a wider range of banking services.

Loans of $2.882b at December 31 were 16pc higher than at December 31, 2005.

Deposits also rose by 16pc to be $2.924b.

³Whatever the shareholder composition is moving forward, we think the formula ERB has developed and our adjacency to Elders is strong regardless of what shareholder transactions may occur,² Mr Hutchinson said.

The BoQ is offering 0.748 BoQ shares and $5.50 cash for each Bendigo share after two years of talks.

The BoQ posted a 21pc rise in first-half net profits this month and shares began trading this week at $18.98. Bendigo shares opened the week at $17.80.

According to BoQ managing director David Liddy, an alliance between the two banks would create opportunities apart from the four main banks and St George.

³This is not a big bank coming down south and marauding,² he said. ³This is about two small banks which have complemen-tary philosophies getting toge-ther.²

Mr Liddy acknowledged Bendigo shareholder concerns and the future of their community banks.

He said both banks had developed successful community-based branches and customer service.

Both banks had stood firm in rural Australia while other institutions had left.

³Our business model will strive to preserve the unique character and particular customer focus of both current Bendigo Bank and BoQ branch networks and business units,² Mr Liddy said.

³It¹s our aim to create a sustainable force, an alternative in the Australian banking financial services landscape.²

Mr Liddy said no community branches or owner-managed branches would be closed under the proposal.

³We will continue to open branches and our initial footprint will be over 575 branches, with business banking and equipment finance centres in each state,² he said.

The BoQ has already indicated plans to opening branches in WA and South Australia.

Synergy benefits of a merger are estimated to be about $70 million.

The Bendigo Bank issued a short press statement earlier this month and said it was continuing to review BoQ¹s proposal.



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