Big bank continues to streamline its business
Westpac has sold its Advance Asset Management to Mercer Australia for an after-tax gain of $225 million, part of the big bank’s continuing efforts to streamline its business. Westpac will also transfer $37.8 billion in funds under administration from PT’s personal and corporate superannuation funds into Mercer Super Trust.
The move is part of Westpac’s strategy to exit non-core activities following a 2019 money-laundering scandal and its grilling by the financial services royal commission, according to a report by The Australian.
The deal doesn’t include the sale of Westpac’s BT Panorama and Asgard platforms, which are used by financial advisers to trade and manage client assets. That sale is expected to draw bids around $1.2 billion, The Australian reported.
For Mercer, the acquisition is part of an effort to grow in Australia, which is already one of the fund manager’s largest markets outside the United States.
“We see this as a statement of intent from Mercer,” David Bryant, president of Mercer’s Pacific region, told The Australian. “We are here to grow and compete strongly. We want scale and are considering organic and inorganic options.”
The deal will make Mercer about the 10th largest super firm in Australia by funds under management. Bryant told The Australian that its fees for default members are the second-lowest in the country.
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“We have real scale, more than 1,000 investment professionals, and deep investments in local markets,” Bryant said. “Mercer now has the benefit of global and local scale.”
After the BT transaction, Mercer will manage $65 billion in Australia, with about 850,000 members. The company expects to retain the approximately 400 BT employees as part of the transaction.
Along with selling off non-core assets, Westpac CEO Peter King has set his sights on cutting the bank’s costs by $8 billion within two years’ over the past year, the bank has slashed 4,000 jobs and has refocused on expanding its digital presence, The Australian reported.
The bank’s digital footprint is already growing, with online sales jumping from 37% to 45%. At the same time, branch numbers dropped by 150. The number of Westpac ATMs has halved over two years as more customers turn to cashless payments, The Australian reported.
