Moody's: No change for Westpac, St. George banks

Moody's Investors Service said it will not be taking action on Westpac Banking Corp.'s ratings, following news that it is in merger talks with St.George Bank Ltd. until more was known about the terms and conditions of the proposed transaction.

Westpac is rated Aa1, prime-1 for deposits and senior debt and carries a bank financial strength rating of B. The agency also said it plans to review St. George Bank's Aa2, prime-1 and B bank financial strength ratings.

In-market mergers for shares, such as proposed by Westpac and St.George, are generally neutral or positive for ratings, Moody's said.

The merger would enhance both banks' franchises, improving pricing power and systemic importance, the agency said.

However, in-market mergers are not without their risks, Moody's added, and these too would have to be incorporated in any rating decision.

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