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S&P happy with BOQ, Bendigo merger

S&P happy with BOQ, Bendigo merger

(20 March 2007 – Australia) Ratings agency Standard & Poor's has maintained its 'BBB+' rating for Bank of Queensland and Bendigo Bank and revised its outlook to positive from stable on each bank. S&P was responding to BOQ’s announcement yesterday that it had made a A$2.4 billion takeover bid for Bendigo.

'If the merger proceeds, the combined group's scale and geographic diversity will be strengthened, although funding, capital, and integration risks remain,' S&P Financial Services credit analyst Thomas Cherian said.

S&P said it expected the ratings to be raised over the next couple of years as benefits from the proposed transaction were realised.

'The proposed funding for the merger is through a share-swap arrangement and cash raised through a rights issue, which partly moderates goodwill costs. In the event that the merger does not proceed, the outlook on both Bank of Queensland and Bendigo Bank will revert to stable,' the ratings agency said.

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