Australia's Westpac bids for St. George

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The deal would create Australia's largest financial services firm in terms of market capitalization, valued at almost A$64 billion (US$60 billion; euro39 billion) based on Friday's closing prices.

"St. George and Westpac are two highly successful banks, but we believe they would be stronger together in a way that allows both to harness the strength of each, while maintaining their unique identities and market positions," Westpac Chairman Ted Evans said in a statement.

Westpac said its proposal is for an all-equity deal but it didn't provide any details on the value of the proposed transaction. At the close of trading Friday, St. George's market capitalization was A$14.95 billion (US$14 billion; euro9 billion).

St. George said in a statement it received Westpac's approach late on May 9, and it expects to be in a position to make a further announcement before the start of trade Tuesday.

Trading in Westpac and St. George shares was halted just before the announcement.

Westpac's new chief executive, Gail Kelly, who is the former chief executive of St. George, said a combined group would more effectively compete with rivals Commonwealth Bank of Australia, Australia and New Zealand Banking Group Ltd. and National Australia Bank Ltd.

Westpac is currently Australia's third largest bank by market capitalization, and with the Commonwealth, ANZ and National Australia forms what is known as the country's "big four" banks.

"The increased scale and integration of operations would drive further investment in our back office processes ensuring more reliable, consistent and improved customer service," Kelly said.

The takeover requires approval of a range of regulatory authorities, and Treasurer Wayne Swan.

Australian Prudential Regulation Authority, Australian Competition and Consumer Commission and Swan's office would not immediately comment on the Westpac's bid.

For years, analysts have speculated that St. George -- Australia's fifth largest bank by market capitalization -- could be a takeover target. The group is outside the big four banks, which are prohibited from merging with one another under the competition rules.

Westpac has long been considered the most likely suitor.

BBY analyst Peter Rice said he did not expect rival suitors to emerge for St. George, but believes the move could spark speculation of further consolidation in the sector.