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Westpac plan increases bank shares

Westpac plan increases bank sharesBANK investors have had a hard time in recent months - but shares have rallied today after Westpac said it wanted to merge with St George Bank.

Commonwealth Bank (cba.ASX:Quote,News) shares were up $1.94 by the close of trade today at $45.86, well up from their year low of $36.98 in March.

CBA shares had climbed to as high as $62.10 in the past year, but fell as the mortgage crisis in the US spread to Australia and boosted funding costs.

Shares in National Australia Bank (nab.ASX:Quote,News) received a big boost from Westpac's chase for St George, ended the day up $1.89 at $34.13.

NAB shares are down 27 per cent over the year after dropping to a year low of $25.85 in March, well down from a 52-week high of $44.84.

For the ANZ (anz.ASX:Quote,News), their shares were up 70 cents at $23.70 by the end of the trading session, up from their year-low of $19.30 but well down from their year high of $31.74.

ANZ shares are down 25 per cent over the past year.

The sub-prime mortgage crisis has spread to Australia and bank returns have gone backwards. According to one of the world's sharpest investors Warren Buffett, there are more losses ahead.

Investors in Westpac have fared the best of all, having lost only 4.5 per cent on their shares over the past year.

Westpac (wbc.ASX:Quote,News) closed at $25.97 on Friday before being placed in a trading halt today after saying it wanted to make a merger offer for St George Bank.

Westpac shares fell to as low as $20.34 in March, well down from their 52-week high of $31.32.

For St George Bank (sgb.ASX:Quote,News), their shares are down 27 per cent over the year, having closed at $26.65 on Friday.

St George shares had fallen to as low as $21.40 in March, a huge drop from their 52-week high of $38.50 – representing a much cheaper buy for Westpac.

But an unexpected merger offer from Westpac could ease the pain substantially for St George investors when the shares come out of their trading halt tomorrow.

For all banks, rising credit costs due to the US mortgage crisis and growing bad debts has hammered returns.

 

source: news.com.au

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