Commonwealth Bank shares plunge 6%

(AAP) The Commonwealth Bank has completed a $2 billion share placement to fund its acquisition of BankWest, which contributed to the decline in its share price after emerging from a trading halt.

Shares in CBA, the nation's biggest home lender, fell six per cent as it played
catch-up with a wider market that dropped about five per cent on Wednesday when CBA
was suspended from trading ahead of its acquisition and share placement
announcement.
"The placement, as well as (the CBA) being out of action yesterday," caused the
decline in the shares, Wilson HTM analyst Brett Le Mesurier said.
Mr Le Mesurier said BankWest looked like a good acquisition for CBA and the share
placement was a good way to fund it.
The $2.1 billion takeover of BankWest and St Andrew's, an insurer and asset manager
from financially troubled UK parent HBOS Plc was at a price that CBA chief executive
Ralph Norris said would have been unthinkable 12 months ago.
The divestment by HBOS was made possible by the global credit crisis, as HBOS is
being taken over by rival Lloyds TSB Group plc to prevent its collapse and the
parent needed the money.
CBA said it funded the takeover with the share placement to make sure it continued
to be well capitalised during the turmoil in markets.
Separately, CBA said it was comfortable with the current range of analysts' cash
forecasts for a net profit of between $4.399 billion and $4.9 billion for fiscal
2009.
CBA shares declined $2.75, or 6.09 per cent, to close at $42.40 as the S&P/ASX 200
Index fell 1.53 per cent. The index 4.99 per cent yesterday.
The lender sold 52.6 million new shares for
$38.00 each, a 16 per cent discount to its closing price on October 7 of $45.15, to
raise the $2 billion.
CBA said the new shares would represent around four per cent of the group's existing
issued share capital.
Chief financial officer David Craig said the placement, which was oversubscribed,
was a great result in a challenging market.
"It ensures the group remains strong in uncertain times, with our ratings and
capital ratios maintained after the acquisition of BankWest and St Andrew's," Mr
Craig said.
CBA will increase its home loan market share to 28 per cent and will be larger than
the combined Westpac Banking Corporation-St George Bank Ltd, which will have a 24
per cent share.
The combined CBA-BankWest company will also have the most household deposits, with a
34 per cent shares.
A combined Westpac- St George will have about 22 per cent of deposits, according to
figures from the Australian Prudential Regulation Authority.
CBA will also gain the biggest market share in Western Australia, which is enjoying
among the highest economic growth rates in the country because of the mining boom.
CBA is also considering its options on Suncorp-Metway's banking and wealth assets
and has held high-level talks with the Brisbane-based group.
The CBA takeover of BankWest and St Andrew's is conditional on all necessary
competition,
regulatory and government approvals.