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CBA plans expansion into European markets

SYDNEY: The Commonwealth Bank of Australia Ltd. said on Sunday its search for major expansion opportunities would focus on Europe, where it aims to eventually derive a quarter of its market capitalisation.

CBA Chief Executive David Murray said the bank would look at new ideas in established European markets rather than acquiring existing financial institutions.

He declined to release details of specific products and markets but said the CBA wanted the venture to eventually account for 25 percent of the bank's value.

"Because we are already of significant size in the Australian market, if we want to grow faster successfully for our shareholders we are going to have to find some growth opportunities outside the Australian market," he told Channel Seven.

"But we are going to have to continue to do very well here too."

In July last year the bank announced it was exploring e-commerce alliances in Europe and the US.

On Sunday, Murray said it had recently made an appointment to its international financial services division in London because it had identified a gap in the European markets.

"We have done a lot of work to identify markets offshore where customers aren't getting a very good deal and where we have products and delivery systems with a lot of experience and some special know-how," he said.

"We are interested in developed markets in the Northern Hemisphere.

Buying a bank outside Australia that had already been operating in a market for a long time would not be beneficial because the CBA would not have much to add, he said.

"On the other hand there are established markets in which new ideas will work very quickly".

His comments came as the bank prepared to release a record half-year profit result on Wednesday.

Analysts predict net profits for the six months to December 31, 1999, will be 15 percent higher than the same period last year.

Merrill Lynch recently upgraded its profit forecast for the bank for the first half of 2000 from 781 million dollars (507.6 million US) to 835 million dollars.

In December, the bank said strong asset growth, a 10 percent improvement in "other income" and a more favourable loan loss provisioning charge would boost results for the period.

CBA posted a net profit of 713 million dollars for the half year to December 1998. AFP