Commonwealth Numbered Regulations - Explanatory Statements

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BANKS (SHAREHOLDINGS) REGULATIONS (AMENDMENT) 1992 NO. 102

STATUTORY RULES 1992 No. 102

ISSUED BY THE AUTHORITY OF THE TREASURER

Banks (Shareholdings) Act 1972

Banks (Shareholdings) Regulations (Amendment)

Section 10 of the Banks (Shareholdings) Act 1972 (the Act) generally limits the nominal amount of the voting shares of a bank in which a person (including a corporation), including associates (defined in section 9), may have an interest to 10 per cent, or 15 per cent with the approval of the Treasurer, of the total nominal amount of the voting shares in the bank.

Section 17 of the Act provides that the Governor-General may make regulations for the purposes of the Act.

Section 8 defines what may be considered an interest in shares for the purposes of the Act. Paragraph 8(9)(d) provides that there shall be disregarded a prescribed interest in a share that is an interest of such person, or of the persons included in such class of persons as is prescribed. The Banks (Shareholdings) Regulations (the Regulations) currently prescribe a class of persons in relation to their interests in the banks listed in the Schedule to the Regulations, where those interests are deemed to be held by virtue of an associate relationship.

The proposed amendment to the Regulations arises out of the Government's continuing consideration of the AMP/Westpac alliance and discussions with relevant parties. Among other things, it has the effect that, subject to certain limitations, certain deemed interests which AMP, Westpac, the trustees of Westpac Banking Corporation Australian Staff Superannuation Scheme (WSSS) or Westpac Financial Services Group Limited and subsidiaries (WFSG) may have in shares in Westpac and other banks referred to in the First Schedule of the Banking Act 1959 are to be disregarded for the purposes of the Act.

The proposed amendment to the Regulations also disregards for a period of six months the shareholding interests of AMP and Westpac in other authorised banks as at 30 January 1992, to allow the parties sufficient time to sell down their interest to 10 per cent.

A detailed explanation of the new Regulation is as follows.

Subregulation 7(1) defines relevant terms and parties to be dealt with by the Regulation.

Subregulation 7(2) prescribes the Trustees of WSSS as a class of persons, and WFSG, AMP Society (AMP) and Westpac Banking Corporation (Westpac) as prescribed persons for the purposes of the Act.

Subregulation 7(3) prescribes, subject to subregulation 7(4), any deemed interests AMP or Westpac have in WSSS and WFSG, as prescribed interests.

Subregulation 7(4)(a) says that the interests prescribed in subregulation 7(3) only apply to interests (including deemed interests) in a bank other than Westpac if the combined total of the shares in that bank in which WSSS and WFSG have an interest does not exceed the greater of

(a)       the combined interests of AMP and Westpac being equal to or less than 10 per cent, WSSS and WFSG can have an interest in 10 per cent less AMP/Westpac holdings; or

(b)       5 per cent of the total shares in the bank.

This allows WSSS and WFSG to have an interest in up to 5 per cent in a bank without that interest being counted as part of the AMP-Westpac interest if the AMP-Westpac interest is 5 per cent or more; and if the AMP-Westpac interest is less than 5 per cent, it allows the combined WSSS and WFSG interests to exceed 5 per cent but not to exceed 10 per cent. Together. interests for AMP-Westpac and WSSS and WFSG cannot exceed 15 per cent in any other bank.

Subregulation 7(4)(b) says that the interests prescribed in subregulation 7(3) only apply to an interest in Westpac (including a deemed interest) if the combined total of the shares in Westpac in which WSSS and WFSG have an interest does not exceed

(a)       if AMP has an interest greater than or equal to 10 per cent of the shares in Westpac, WSSS and WFSG can have an interest up to 5 per cent of them;

(b)       if AMP has an interest in less than 10 per cent of the shares in Westpac, WSSS and WFSG can have an interest in the lesser of

(i)       15 per cent minus AMP's interest; or

(ii)       10 per cent;

(c)       if AMP has no interest in Westpac then WSSS and WFSG can have an interest in up to 10 per cent.

This allows WSSS and WFSG to have an interest in up to 5 per cent in Westpac without being counted in any interest which AMP might otherwise have in Westpac in circumstances where AMP has an interest in up to 15 per cent in Westpac. If AMP has an interest in less than 10 per cent in Westpac, WSSS and WFSG may have an interest in more than 5 per cent but no more than 10 per cent in Westpac without its being counted in any interest which AMP might otherwise have.

In calculating AMP's and Westpac's shareholding interests for the purpose of determining whether the limitations applying in relation to WSSS and WFSG under subregulations 7(4)(a) and 7(4)(b) have been exceeded, it is not intended that an interest referred to in subregulation 7(3) will be taken into account or an interest which AMP or Westpac have in shares in which the other has an interest only because they are deemed associates by virtue of section 9 of the Act.

Subregulation 7(5) prescribes as an interest any interest that WSSS and WFSG are deemed to have by reason of a relationship with Westpac or AMP.

Subregulation 7(6) prescribes as a prescribed interest for a period of six months from the time the Regulation comes into effect, the shareholding interests as at 30 January 1992 of Westpac and AMP in authorised banks.