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Corporate Finance II - Essay Example

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Masters
Author : xgorczany
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Finance & Accounting
Pages 4 (1004 words)

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Corporate Finance Essay Contents Contents 2 Westpac Banking Corporation 3 Financial Policies of Westpac Banking Corporation related to Capital Structure 3 Dividend Payout Policies of Westpac 3 Buyback of Shares by Westpac 4 Capital Structure Decisions 5 References 7 Westpac Banking Corporation Westpac is a first ever financial institution in Australia that provided banking services to the citizens…

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Corporate Finance II

The bank is listed in the Australian Stock Exchange and has made a satisfactory performance over time. Financial Policies of Westpac Banking Corporation related to Capital Structure In 2008, Westpac went into a strategic alliance with St. George Bank Limited in a merger operation. In that merger the exchange ratio of St. George Bank Limited to Westpac Bank was 1.31. This means that the valuation of the assets of St George was at a higher level than that of Westpac, and therefore the shareholders of St George have got a better valuation as compared to the shareholders of Westpac. The bank went into a merger policy because it wanted to make more use of its resources and have a better financial health (Rosenbaum and Pearl, 2009, p. 36). This would also help the bank to survive in the long run. At this juncture to retain the positive sentiment of the investors, Westpac announced a special dividend of $ 1.25 per share. This has a positive impact on the prices of the shares and the prices seem to go up; therefore, it is a deliberate step on part of the company to keep a stable position in the securities market. Dividend Payout Policies of Westpac The financial history of the company reveals that dividend has been paid by the company bi-annually in the month of July and at the end of the year, December. ...
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