Reuters Australia
Bids for GE's Aussie mortgage unit due next week-source
Friday August 8, 01:59 PM
SYDNEY, Aug 8 (Reuters) - Indicative bids for General Electric Co's GE.N potential sale of its Australian mortgage business are due next week, but bankers do not expect a stampede as likely buyers grapple with the fallout of a global credit crisis.
GE's advisers, JP Morgan and Citigroup, have sent out information memorandums (IMs) to about 10 interested parties, including domestic and foreign banks. Commonwealth Bank of Australia Ltd (ASX: CBA.ax) (CBA), the nation's second-biggest lender, was unlikely to bid, one industry source told Reuters. CBA declined comment.
"People have had the IMs for a while ... and they have to respond with interest next week," said one person with direct knowledge of the matter. He declined to be identified as the sale process was confidential.
"No one really has come back so we are just waiting to see what people come back and say," he added.
In May, GE said it was considering strategic options for Wizard Home Loans, a non-bank lender owned by GE's financial services arm, GE Money.
Local media have said GE Money paid about A$500 million ($455 million) to buy Wizard from its founder Mark Bouris in 2004.
"It's not a great market to sell an asset like this. I think there is still enough interest," the source added.
Wizard, with some 250 branches across Australia, has suffered like other non-bank lenders due to rising credit costs sparked by the global credit crisis.
Australian banks have raised their share of mortgage lending to 90 percent, official data showed, up from about 78 percent a year ago.
WRITEDOWNS
National Australia Bank Ltd (ASX: NAB.ax) and Australia and New Zealand Banking Group Ltd (ASX: ANZ.ax) have recently raised provisions for bad debts due to their exposure to U.S. mortgage markets.
That has limited their ability to do acquisitions, though Westpac Banking Corp (ASX: WBC.ax) is awaiting regulatory approval for its proposed A$17.2 billion buy of St George Bank Ltd (ASX: SGB.ax) , and CBA is in exclusive talks to buy the units of Dutch bank ABN AMRO, which its new owners are selling. ($1=A$1.10) (Reporting by Denny Thomas; Editing by Ian Geoghegan)
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