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Banking industry consolidation coming, says Kelly

Banking industry consolidation coming, says Kelly

(22 May 2007 – Australia) Speaking at the Australian-Israeli Chamber of Commerce lunch, St George chief executive officer Gail Kelly said the banking industry is poised to undergo consolidation in the coming years. Ms Kelly said the government’s four pillars banking policy which prevents mergers between the nation’s largest banks is likely to be abandoned beyond the short term.

Smaller banks continue to face pressure to drive down costs and it is likely there will be consolidation among Australia’s regional banks in the near future, Ms Kelly added.

St George has recently been described as a likely target for some of the country’s larger banks but Ms Kelly warned any likely acquirer would have to be "very thoughtful" about preserving the value St George has built.

St George has also been touted as a possible buyer for smaller regional banks including Bendigo Bank and Bank of Queensland which were involved in failed takeover discussions last month.

Ms Kelly added that while St George will keep an eye on future market developments regarding industry consolidation, current conditions offer plenty of opportunities for organic growth.

East & Partners Business Banking Sentiment Index for March 2007 found that the majority of businesses saw industry consolidation in a negative light. In addition, non-Big Four bank customers said they would prefer for their bank to be acquired by a foreign or a regional bank rather than a Big Four domestic bank.

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