Australia approves AMP's AXA merger

SYDNEY: Australia Tuesday approved finance firm AMP's proposed acquisition of the Australian and New Zealand businesses of AXA Asia Pacific, saying the new entity would be a strong competitor to major banks.

Treasurer Wayne Swan said his decision on the multi-billion-dollar deal followed a thorough assessment of the impact on Australia's national interest, particularly the need for a strong, stable and competitive financial system.

"The combined strength of AMP and AXA Asia Pacific, with a larger consolidated balance sheet and broader capital base, will allow the merged entity to compete vigorously with the major banks across both the Australian wealth management and banking sectors," he said in a statement.

Australia's AMP, which combines financial, wealth management and banking services, plans to integrate AXA Asia Pacific's Australian and New Zealand businesses with its own and sell its Asian interests to AXA's French parent company, AXA SA, for about Aus$10.4 billion ($10.60).

The planned merger, aimed at creating a "fifth pillar" in Australian financial services to rival the four dominant banks, comes after National Australia Bank's rival bid was dismissed by competition regulators.

Swan said he had been advised the merger "will enable greater investment in AMP Bank, enhancing its ability to compete further in the mortgage market."

AMP has said it wants to grow its banking arm, but it was funds management expansion that was driving the acquisition.

Swan said he was imposing strict conditions on the acquisition to ensure the best possible outcomes for affected AMP and AXA Asia Pacific employees, adding that he had taken careful account of assessments of the merger by Australia's competition and financial regulation watchdogs.

AMP welcomed the government decision on the Aus$13 billion merger, which will be voted on by AXA APH minority shareholders on Wednesday.

It said the conditions including maximising redeployment opportunities for affected staff, timely access to entitlements for those affected and consulting with finance sector unions on developments.

AMP last month reported full-year underlying profits for 2010 of Aus$760 million, two percent down on 2009.