Fegan may go in Westpac merger

Mr Fegan's departure is widely anticipated following the decision of the St George board to back the revised terms of its tie-up with Westpac, which now only needs the backing of Treasurer Wayne Swan and the formal approval of St George shareholders.

Mr Fegan has spent the past five months ensuring that Australia's fifth-largest bank has remained focused on delivering on its promise of 8-10% earnings growth in its last year as an independent institution.

While St George reaffirmed on Monday its unanimous backing for the 1-for-1.31 share-swap merger terms, Mr Fegan has insisted that his bank should not be distracted from its business as a stand-alone organisation before it is swallowed by its bigger rival.

Mr Fegan's three major tests of his continuing operational plan have been satisfied by the ASX announcements over the past month:

St George's confirmation that it will turn in earnings growth of between 8% and 10% for the year ending September 30, which should guarantee a net record profit of $1.32 billion.

It has already completed 40% of its 2009 funding needs of $12billion, despite the financing pressures resulting from the global credit crisis.

It will pay out almost all of its profit growth this year amounting to around $160 million in a special one-off dividend to its shareholders before Westpac gets control of its finances.

Mr Fegan's position has been the focus of much debate since the merger with Westpac was unveiled in May.

He was never a contender for the top job at the combined group as that was filled from day one by former St George chief executive Gail Kelly, who formally took on the role of Westpac CEO on February 1.

While Ms Kelly has indicated that the retail banking operations of St George would be run independently under the multi-brand business being planned by Westpac, it has been clear from the start that Mr Fegan was not interested in managing a slimmed-down version of his bank as a subsidiary.

It is believed that Mr Fegan will stay on for a short period with the merged banking group to ensure a smooth handover, after the expected agreement of the share-swap merger terms by St George shareholders at a merger vote in November.

That will cap off Mr Fegan's only year in charge of St George, following his appointment to the chief executive job after Ms Kelly's defection to Westpac last August. Mr Fegan was unavailable for comment yesterday as he is on an investor tour to New York and London.

KEY POINTS

? Paul Fegan is to step down as chief executive after St George merges with Westpac.

? He may stay on for a few months after November to ensure a smooth handover.

LINK

? www.stgeorge.com.au