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Citicorp acquisition of Grindlays



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Deputy Leader of the Opposition

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NEWS RELEASE BY THE HON. JOHN HOWARD, MP,

The Treasurer's decision to prevent the Citicorp acquisition and holding of a foreign-owned half-interest in an existing 100 percent foreign-owned Australian merchant bank, Grindlay's Australia, appears to represent a significant and disturbing

tightening of the foreign investment guidelines.

The previous guidelines had been that such an aquisition of an existing merchant bank could be acceptable even if there were no substantial benefit to Australia where no Australian buyer was available and no reduction in Australian equity was

involved.

In this case, on the contrary, the deal involves, and is dependent on, an increase in Australian equity in another merchant bank, CitiNational, from 51 percent to 100 percent. Instead of being 49 percent foreign-owned, CitiNational would become 100 percent Australian owned.

This results from Citicorp selling its interest in CitiNational in order to acquire a foreign-owned half interest in Grindlay's.

The Treasurer's clear change in interpretation of the guidelines does not auger well for proposals to increase competition in the banking system by allowing the introduction of a limited number of foreign-owned trading bank interests and appears to limit

the scope for commercially desirable rationalization of the merchant banking industry in Australia.

Canberra 10 August 1983

Parliam ent H o u se. Canberra, A C T. 2 6 0 0