CBA has no eastern states strategy for BankWest

Body language said it all at Commonwealth Bank headquarters yesterday. Chief executive Ralph Norris came into the briefing room to announce the bank's acquisition of BankWest looking like cock of the walk and was greeted by a gaggle of smiling executives. It's usually much more staid.

The bank has taken an aggressive second tier rival out of the market at a ridiculously low price and regained its number one retail bank position from the pretender Westpac.

What was not clear was what Commonwealth plans to do with BankWest outside Western Australia.

The focus is very much on WA, where the combined group will be dominant. It will have 177 branches, compared to 107 for its nearest rival, the combined Westpac and St George, 81 for ANZ and 72 for National.

Asked what the acquisition meant to the CBA, Norris said Commonwealth had suffered from low market share in WA, the country's fastest growing state.

He was less clear about what would be done with the BankWest business in the eastern states. BankWest will remain a separate entity, a subsidiary of the CBA.

It will retain its brand identity in Western Australia but the strategy for the eastern states is yet to be resolved. The ambitious BankWest branch rollout in New South Wales, Victoria and Queensland will almost certainly stop immediately.

Norris said a decision about retaining the BankWest brand outside WA had yet to be made, which can be taken to mean it will disappear within 12 to 24 months.

He said BankWest would have the same relationship to Commonwealth that New Zealand subsidiary ASB had, with a great degree of autonomy.

The most striking thing about BankWest is its aggressive product pricing - its 10 per cent rate on its bonus saver account and 8.1 per cent promotional rate on TeleNet saver.

Norris was not making any promises about allowing the bank to maintain its price leadership. He said: "It will be competitive."

Based on The Sheet's analysis of mortgage market and APRA data on deposits, the combined entity will have market leadership in home lending, with 24.2 per cent compared to Westpac/St George's  23.1 per cent.

It will have 34.1 per cent of household deposits, compared to 22.5 per cent for Westpac/St George, 13.3 per cent for National and 13.1 per cent for ANZ.

In business deposits it will have a 22.1 per cent market share, just behind Westpac/St George.

CBA will lag Westpac/St George in credit card share (20.2 per cent versus 19.1 per cent, based on data from MWE Consulting) and lag National in business lending (18.9 versus 18.8 per cent, based on CBA data).

It will run third to Westpac/St George and National in personal lending, once again based on CBA data.

It will have 10.9 million customers and 44,600 staff. Norris said there were no plans to retrench BankWest staff.