Commonwealth Numbered Regulations - Explanatory Statements

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BANKS (SHAREHOLDINGS) REGULATIONS (AMENDMENT) 1996 NO. 353

EXPLANATORY STATEMENT

STATUTORY RULES 1996 No. 353

Issued by the Authority of the Assistant Treasurer

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) 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 of the bank. Under subsection 10(4) of the Act the Governor-General may, after application made to the Treasurer by a person, if the Governor-General is satisfied that to do so is in the national interest-1-, fix a higher percentage for that person by instrument published in the Gazette. Subsection 10(5A) provides that the Governor-General may, on the publication under subsection 10(4) of an instrument fixing a percentage applicable to a corporation in respect of a bank, after application made to the Treasurer by the corporation, by instrument in writing published in the Gazette, declare that the percentage so fixed is also applicable to the persons who are from time to time relevant officers of the corporation in respect of the bank.

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

Lloyds Bank NZA Limited (Lloyds) is the Australian subsidiary of the National Bank of New Zealand Limited (the seller). Lloyds provides wholesale banking services and has a small private banking business. The seller wishes to concentrate on its banking operations in New Zealand and Lloyds does not fit within this strategy. The purchaser, the ABN AMRO group plans to provide an extended range of merchant banking services and Lloyds will complement the purchaser very well.

ABN AMRO Australia Limited is owned by ABN AMRO Bank NV, incorporated in the Netherlands which is in turn owned by ABN AMRO Holding N-V, also incorporated in the Netherlands. Therefore, ABN AMRO Holding NV is the ultimate parent of ABN AMRO Australia Limited. Both the Dutch central bank and the Reserve Bank of Australia, have declared in writing that they have no objections to the proposed acquisition.

To reflect the change in ownership of Lloyds, instruments have been gazetted in accordance with the Act, effectively fixing a percentage of 100 under subsection 10(4) for ABN AMRO Australia Limited, ABN AMRO Bank NV and ABN AMRO Holding NV (the ABN AMRO group) in relation to its interest in Lloyds.

Under section 9 of the Act the associates (including officers, partners, subsidiaries and related companies) of the ABN AMRO group would also be deemed to have the same interest in Lloyds as those corporations. In the case of officers of the ABN AMRO group, an instrument pursuant to subsection 10(5A) of the Act is proposed which would fix a percentage of 100 in relation to interests in Lloyds for those persons who are from time to time relevant officers of the ABN AMRO group.

Under the Act, it is not possible to make a 'class' instrument for the interests of the associates of the ABN AMRO group, other than its relevant officers. These other associates represent a large and ever-changing group of persons and corporations.

Rather than make an instrument pursuant to subsection 10(4) for every person within the meaning of section 9, it is convenient to prescribe these interests - that is, to have them disregarded for the purposes of section 10 of the Act - by regulation, as provided for by section 17 and paragraph 8(9)(d).

Paragraph 8(9)(d) of the Act provides that a prescribed interest in a share, that is an interest of such a person or class of persons as is prescribed, shall be disregarded. 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 effect of the proposed amendments to the Regulations would be to disregard, for the purposes of the Act, interests in Lloyds arising from associate relationships with the ABN AMRO group.

The details of the proposed Regulations are as follows:

The Schedules to the item 17 Banks (Shareholdings) Regulations is amended by adding the following corporations to column 3:

ABN AMRO Holding NV, being the corporation formed or incorporated under that name in the Netherlands

ABN AMRO Bank NV, being the corporation formed or incorporated under that name in the Netherlands

ABN AMRO Australia Limited

-1- It is in the national interest for the ABN AMRO group to own up to 100 per cent of Lloyds. First, Lloyds is already owned by a foreign bank and as ABN AMRO already operates in Australia there will be no adverse change in the level of foreign ownership. Second, the ABN AMRO group specialises in the -wholesale section of the finance industry, providing important services to Australia's business community. It is anticipated that their level of professionalism will enhance the competitiveness of Australian businesses and raise the level of competition among financial service providers. This in turn is expected to increase the potential in the future, for Australians to successfully compete in overseas markets.