Westpac procures capital fix with BTIM sell-down

Westpac will top up its capital by up to A$700 million with the sale of part of its holding in BT Investment Management.

The bank and BTIM yesterday outlined plans for a bookbuild and retail offer to cater to the share sale.

Westpac said it would reduce its holding in BTIM from 59 per cent to between 31 per cent and 40 per cent. This will lift the bank's core capital ratio by up to 15 basis points, the bank said.

Brad Cooper, head of the bank's BT wealth arm will remain on the BTIM board as a bank nominee.

Shares in BTIM last traded at $8.76, in the middle of a 12-month range from $5.65 to $10.97.

Conjecture over drastic steps by banks to improve capital levels is a continuing theme for the industry as the Australian Prudential Regulation Authority prepares to outline new requirements in the wake of the Financial System Inquiry and debate by the Basel committee.

In an interview with ANZ's BlueNotes portal this week, ANZ's chief financial officer Shayne Elliott said regulators "would be keen to create an orderly transition to more capital-heavy banks and would look to give the sector a chance to do so in an organic and sensible fashion.


"Right now our bet would be it's more likely to come in terms of some changes to the way mortgage-risk weightings are calculated rather than a general application," he said.

"As of today we don't know exactly how much capital we are going to be asked to hold by the regulators, we don't have a perfect answer. We know what we think it might be, we don't have a very good answer," he said.

"We don't know by when, so we don't know what the timetable is, so we don't know how quickly we're going to get there, and we're not sure in which form it's going to come."