Westpac selects $4bn worth of non-core wealth assets to offload

Operations identified as non-core for the bank include its $15bn dealer finance and auto loans portfolio.

Westpac directors are expected to determine at a board meeting in a fortnight a plan for a selldown of more than $4bn worth of non-core wealth assets.

At the bank’s board meeting in two weeks’ time, Westpac’s directors and chief executive Peter King will make a decision on what non-core assets will be sold first, as the bank focuses on mainstream banking and returns funds to its core operations amid the challenging COVID-19 environment.

Operations identified as non-core for the bank include its $15bn dealer finance and auto loans portfolio, which some expect could fetch anywhere up to $2bn, its BT Panorama wealth management operation, its Pacific Bank, its general insurance division and it $1.5bn life insurance operation, which is already up for sale through JPMorgan.

Analysts estimate Westpac’s wealth platform could be worth between $700m and $1bn, while its general insurance business could be worth between $500m and $1bn.

The operations sit within Westpac’s recently formed Specialist Businesses unit overseen by Jason Yetton.

The car loans and dealer finance business has been mooted for sale for some time, with Morgan Stanley working on the plan.

Moves are currently afoot to sell its far smaller equipment finance operation.

Cerberus Capital Management was tipped to be looking at the business last year, along with Bain Capital and Bank of Queensland, as revealed by DataRoom, and Cerberus had been closing in late last year.

Talks have resumed between Westpac and the private equity firm, which has tapped Bank of America to provide funding to buy the $600m-odd loan book.

Parties expected to be interested in Westpac’s non-core portfolio include major global private equity funds such as Apollo Global Management, Blackstone, The Carlyle Group, Kohlberg Kravis Roberts, BGH Capital, Affinity Equity Partners and TPG Capital.

Westpac, with its Panorama wealth management platform, is the largest platform provider in Australia. It has a 19 per cent market share, and started a price war in 2018 by lowering its platform pricing.

Some say it remains a logical move for AMP to buy the business, but many believe the listed financial is not in position to do so.

However, a play by a private equity firm could be to buy both operations and unite them.

Westpac is selling its operations as CBA offloads its general insurance unit and the NAB remains in a process to sell its MLC wealth management operation, with Blackstone, BGH Capital, KKR and Apollo among the groups that have recently been circling.