St George Bank is the number 5 bank in my home country (Australia). It is currently subject to an all-stock offer by Westpac - but if you were an American you might wonder why you would want it.
After all - St George is probably the only bank in the English speaking world which still advertises zero-downpayment mortgages on TV. Here is the description from their website.
I suspect the description will disappear sometime - so below is a snip preserved for posterity:
Note that St George will "sell" you a zero-down mortgage to buy vacant land. I do not think Indy Mac or Countrywide allowed that.
But why stop at zero down loans. The company will also do limited documentation loans - but with an 80% LTV restriction. This is the page from their website - but again I wish to preserve a snapshot:
Again you should read the small print. This is not a normal amortizing low-doc. Its a low doc line of credit.
Hopefully of course you should get a big-fat-margin for lending low-doc line of credit. But you would be wrong. St George is so keen for volume that they offer the low-doc line of credit at a discount to the standard rate in Australia. Below is an extract:
So can someone please explain to me again why Westpac is so keen to buy this bank? I don't get it. There is no big problem in the Australian mortgage market - so maybe this is just June 2006 redux. But Westpac buying St George smells awfully like Wachovia buying Golden West.
Full disclosure: No position in any stock mentioned.
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