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Westpac to offload stake in BNPL services provider Zip

Australian banking group Westpac is reportedly divesting its stake in buy now, pay later (BNPL) services provider Zip.

The lender will sell 10.7% of its stake in Zip in a deal valued at nearly A$368m ($260m), Reuters reported.

According to Refinitiv data, Zip’s per share offer price for the sale is A$6.65, which represents a discount of 6.1% from its previous closing price of A$7.08.

The move is in line with the bank’s aim to trim its portfolio and improve its capital position, the report added.

Westpac’s capital position has been impacted by a record lawsuit settlement and the rise in bad loans provisions due to the Covid-19 pandemic.

The stake sale in Zip will boost the bank’s common equity tier 1 (CET1) capital ratio by nearly eight basis points, according to Reuters.

Westpac chief information officer Gary Thursby said: “We are continuing to explore opportunities with Zip, including working to integrate their buy-now-pay-later functionality into our mobile banking apps across Westpac and our regional bank brands.”

Westpac anticipates the sale settlement – a bookbuild to institutional investors managed and underwritten by UBS – to occur on 21 October 2020.

Recently, Australian buy now, pay later (BNPL) services provider Afterpay forged a partnership with Westpac to offer savings accounts to its Australian customers.

By partnering with Afterpay, Westpac will expand its footprint into the fintech space and target younger customers.

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