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Strong market support for Adelaide Bank acquisition

Strong market support for Adelaide Bank acquisition

(29 April 2005 – Australia) Adelaide Bank has received a strong response to the A$100 million capital raising it required to acquire Goldman Sachs JBWere’s Australian margin lending business. The issue of just under 10 million new shares at A$10.20 needed to buy the business for $61 million, closed oversubscribed.

Adelaide Bank chief financial officer Frank Lupoi said the response from investors indicated they were supportive of the bank’s strategies.

"These strategies are expected to deliver shareholder earnings per share growth in the 14 to 15 percent range and cash return on equity of around 18 percent for the 2005 financial year," he said.

Ratings agency Moody’s affirmed Adelaide Bank’s ratings, saying the purchase would considerably enhance the bank’s market position and that financial impact would be mitigated by the equity raising.

"[Adelaide Bank] has a very focussed strategy, with margin lending being one of its core business lines. The acquisition should not have a major impact on its risk profile," Moody’s said.

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