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Shareholders vote in favour of St George merg -

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Shareholders vote in favour of St George merger

The World Today - Thursday, 13 November , 2008 12:18:00

ELEANOR HALL: In Sydney today shareholders of St George Bank voted overwhelmingly in favour of a
merger with Westpac that will create Australia's largest bank. But the vote was accompanied by some
impassioned protest about the demise of the bank that started out as that building society with the
big green dragon.

Richard Lindell was at today's shareholders' meeting in Sydney and he joins us now.

So Richard, what was the mood of shareholders at the meeting?

RICHARD LINDELL: Well there were hundreds of shareholders there this morning. Many of those were
there to lodge a protest vote and certainly on the floor there were a lot of questions regarding
potential job losses. There were a lot of questions regarding executive and board pay and how that
will play out under the scheme of arrangements. And any of those questions with a protest element
to it were met with a warm round of applause.

Many of the shareholders are in fact customers as well so even those voting in favour were a bit
sad to see end of an independent fifth, Australia's fifth biggest bank.

Here's what some of them had to say this morning.

SHAREHOLDER: Well, I am against the multi-globalisation should we say. I was in the Advance Bank
before St George took over and it was a great little bank and St George took over and it is getting
bigger and now of course Westpac has taken over and it is going to get bigger still and less
competition mainly.

SHAREHOLDER 2: We'll be voting in favour of the merger. St George has been very good to us and for
us and, but however this is the way things go.

SHAREHOLDER 3: We are a little bit sorry to see St George gobbled up because we have had rather a
fond feeling for it but we are going with the flow here and I think it should work well.

RICHARD LINDELL: Of course in these deals, it is all about the proxies and more than 94 per cent
voted in favour of the deal so it is in fact a done deal.

ELEANOR HALL: Now you mentioned job losses. How many jobs are at risk?

RICHARD LINDELL: Well, the chairman did concede that there will be job losses. Some estimates say
around 2000. The union is warning of many, many more. Of course these mergers rest on cutting costs
so there will be losses of jobs in the back office, in call centres and in administration as well.

But the bank is a little hamstrung because one of the conditions from government is that there is
no branch closures for at least three years and the CEO of Westpac now is Gail Kelly who was also
the CEO of St George beforehand, so she knows the power of the St George brand and she is unlikely
to rationalise to the extent where that power and that brand is lost.

ELEANOR HALL: But the union is warning of thousands of job losses you say?

RICHARD LINDELL: That is correct and here is what the SFU national secretary Leon Carter had to say
earlier today.

LEON CARTER: This proposal is not a result of the financial crisis. Are banks doing it a bit
tougher than they used to? Of course they are. But St George, even in this environment, has made a
billion dollar profit. You have got the government guarantee. Banks are not in danger of
collapsing. This is simply a takeover from Westpac to remove one of its competitors and why should
shareholders vote for it?

Why should they vote for a scheme that will consign 5000 workers to unemployment?

ELEANOR HALL: That is the secretary of the financial sector union Leon Carter.

Now he was saying that this is not about the financial crisis, but the credit squeeze does make
things more difficult for Westpac, doesn't it?

RICHARD LINDELL: Well, there is no doubt that funding costs are rising and in fact, even raising
capital in global financial markets is very difficult at the moment as we all know.

But in recent years St George has had a very good track record. It has grown very strongly even
though its biggest market is New South Wales which has been particularly sluggish but the St George
chairman did warn this morning that is a deal failed, growth would slow, it would have to raise its
tier one capital which effectively means it can lend less and that of course, if it lends less, its
profits will also fall

So here is what chairman John Curtis told shareholders.

JOHN CURTIS: We are now trading in very different and very turbulent financial times.

Despite the recent action taken by the Australian Government, our financial services sector is
expected to continue facing a number challenges in the coming year.

These include softening growth across the broader Australian economy. Slower growth in lending
products and an increase in credit defaults. In this environment, the earnings growth for all
banks, including St George, is expected to slow.

ELEANOR HALL: That is the chairman of St George, John Curtis.

So Richard, what does this merger do to competition in the sector?

RICHARD LINDELL: Well St George at the moment is Australia's fifth biggest bank but we are not only
looking at the loss of St George as an independent bank, just in the last month or two we had
BankWest being sold to the Commonwealth Bank of Australia and BankWest is very big in Western
Australia. Not only that, it had big expansion plans along the east coast as well.

So what we are seeing now is a big shakeout of the financial services section and we'll certainly
see less competition now. We'll have the big four banks, the four pillars, plus a few little
regionals but they won't have much market share so we are really looking at those four banks
dominating the market.

ELEANOR HALL: Not so good for consumers, is it?

RICHARD LINDELL: Absolutely right because of course the basics of economics tells us that less
banks means less competition and that will mean higher rates for consumers.

But there is no doubt that in these times the Government has allowed this to happen because it
wants the banks to be stable and solvent so they have foregone competition in the short term but
they will certainly have a longer-term policy here because there will be less competition in the
sector.

ELEANOR HALL: Richard Lindell, thank you. And Richard Lindell was at the St George annual general
meeting this morning.