Bendigo and Adelaide trim merger savings
Bendigo and Adelaide banks very slightly pulled back their estimate of the savings available from their merger in the booklet published on Friday in connection with the special meeting of shareholders of Adelaide Bank to vote on the merger.
The two banks now forecast annual savings on non-interest expenses of Adelaide of approximately $60 million to $65 million. This compares with a forecast savings of $65 million cited by Adelaide and Bendigo at the time of the announcement of the merger proposal two months ago.
Eighty per cent of those pre-tax cost savings are expected to be realised in the second full year of operation.
This savings estimate, however, ignores "one-off merger and integration costs" which are forecast in a range of between $50 million to $60 million.
The merged bank will adopt a policy of paying approximately 70 per cent of cash earnings as fully franked dividends.
There's no real detail at this stage on capital policy given that capital targets are still being worked out with APRA.
Bendigo and Adelaide Bank will have merged assets of $50 billion and net assets of $2.7 billion.
Steve Crane and Patricia Cook will stand down as directors of Adelaide Bank following the merger. Kevin Osborne, Adele Lloyd and Kevin Abrahamson will all join the board of Bendigo Bank with Osborne taking the post of deputy chair.
Bendigo Bank is yet to decide who will continue as directors other than their current chair, Robert Johanson, who will continue to serve as chair of the board of the merged bank.
The scheme booklet also contains the required independent expert's report, which on this occasion is the work of KPMG.
The recent history of Bendigo Bank's rejection of two takeover proposals from Bank of Queensland this year - and the consequences of those offers and rejection of those offers on shares of regional banks - made the business of working out fair value tricky for KPMG.
The firm worked around the problem by presenting range after range of fair value calculations in their report, and too many to neatly summarise.
Adelaide Bank shareholders will receive 1.075 shares in Bendigo Bank under the latter's offer.