Commercial Bank of Australia

The Commercial Bank of Australia (CBA, 1866 – 1982) was an Australian retail bank which merged into the Bank of New South Wales bank in 1982, to form Westpac. The bank was known as the CBA, but that should not be confused with the Commonwealth Bank which is called the CBA today.

The Bank of New South Wales had been interested in the CBA as early as 1962, and had put up a merger proposal in 1968, but that stumbled over increasing CBA's pension entitlements scheme to the more generous level of the Wales' one, and on the CBA's relucance to lose its identity to the larger Bank of New South Wales.

In 1980 the Bank of New South Wales was the country's largest bank and CBA about the fifth largest and the Bank of New South Wales was aiming to expand further. It quietly bought some CBA shares in late 1980 and in early 1981 made a merger approach, which was rejected. The ANZ Bank approached the CBA shortly after that, and when this was announced to the stock exchange it took the Bank of New South Wales by surprise. They made a further proposal, and in May 1981 the CBA board accepted that offer over the ANZ's.

The merger terms agreed were quite favourable for the CBA. CBA shareholders got cash and scrip worth about 18 times earnings and there were guarantees of no job losses to CBA staff. The word "takeover" was carefully avoided, though the Bank of New South Wales was certainly driving the process and was by far the bigger. To emphasise the deal as a merger it was agreed a new name would be adopted (the name Westpac was later chosen). The Wales and the CBA both gave up over 100 years of history in that name change, though the loss caused more angst on the Bank of New South Wales side than the CBA.

References

• Westpac: The Bank that Broke the Bank, Edna Carew, Doubleday, 1997, paperback ISBN 0-86824-664-6.