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Canberra to raise

A$3 bln in bank sale

SYDNEY: The Australian government on Tuesday said it planned to raise at least A$2 billion from the public sale of part of its majority stake in the Commonwealth Bank of Australia (CBA) this year.

Finance Minister John Fahey said all but about a fifth of the government's remaining 50.4 percent stake would be sold through a public offer, and the other shares sold back to the bank under a buyback scheme to raise an additional A$1 billion.

The maximum buyback price would be A$10.70 per share, he told a news conference in Sydney.

The CBA has about 949.23 million ordinary shares, of which the government owns 478.32 million. CBA shares closed nine cents lower at A$9.88, but have traded as high as A$12.05 this year.

Prime Minister John Howard said soon after the general election on March 2 that the government would sell its remaining stake in CBA as soon as market circumstances permitted.

The sale of this stake and the sale of a third of state-owned telecommunications carrier Telstra are key planks of the new conservative government's privatisation agenda.

The government has said it is committed to slashing the budget deficit in the next few years.

Fahey told a news conference that he and Commonwealth Bank chairman Tim Besley had reached conditional agreement on the CBA's buyback.

"The buyback will be undertaken in conjunction with the government's sale of shares in a public share offer about the middle of the year," Fahey said.

"The bank will pay the average price at which shares are sold to investors in the public share offer subject to the buyback price not exceeding A$10.70 a share."

Besley said in a statement that the buyback agreement would be put to a general meeting of shareholders at a date to be announced once all approvals had been received.

Besley said the buyback agreement was conditional on shareholder and government approval at the meeting, the public share offer being completed by July 31 or an agreed later date, and the government receiving gross proceeds from the public share offer of at least A$2 billion.

He said the buyback was expected to increase earnings per share and the return on shareholders' funds.-Reuter