Two Australian banks have agreed to a merger that will create the country's biggest financial services group, and ratings agency Standard and Poor's has lowered the ratings of Pakistan. Claudia Blume in Hong Kong has more on these and other business stories from the Asia-Pacific region.
Australia's fifth largest bank, Saint George, accepted a merger offer of almost $18 billion from larger bank Westpac Banking Corporation. The deal requires approval from regulators but if approved will create Australia's largest bank by market capitalization, worth about $62 billion. It will also be the biggest takeover in the country's banking history.
Critics say the merger will decrease competition and lead to higher fees and poorer service. But Westpac chief executive Gail Kelly says it will bring benefits for customers, shareholders and employees.
"There clearly are a lot of things working for us here. I think the model itself mitigates risk. The organizations have similar culture," she said.. "We have an excellent knowledge of both businesses and we have skills and experience in implementation on board. People have done such integrations before. This is exciting, and it's very much an agenda about growth."
International ratings agency Standard and Poor's cut its long-term foreign currency debt rating for Pakistan to B from B plus, indicating an increased risk. The rating evaluates the country's capacity to repay debt. The country's long-term currency rating was lowered to BB minus (double B minus) from BB (double B). Standard and Poor's says the outlook on the ratings is negative, which means further cuts are possible.
The agency says the downgrade reflects increasing pressure from expanding fiscal and trade imbalances, combined with a volatile political setting. Analysts say the downgrading and negative outlook will hurt the ability of Pakistan's government to raise foreign debt.
Britain's largest retailer, Tesco, is buying debt-ridden South Korean discount chain Homever for 1.9 billion. Tesco will add Homever's 35 outlets to the Homeplus stores it runs with South Korea's Samsung group in the country. South Korea is Tesco's most profitable overseas market.
Malaysia's national oil firm Petronas signed a production sharing agreement for a group of oil fields in Uzbekistan. Under the deal with Uzbekistan's government, Petronas will develop the Urga, Kuanish and Akhchalak oil fields in the north of the country. Last year, the Malaysian company signed agreements to drill for two oil blocks in southern Uzbekistan.
In other news from Malaysia, the government has unveiled tax incentives designed to make the country a global hub for halal products. These are food and other products, such as cosmetics, prepared in accordance with Islamic rules. Incentives include an investment tax allowance and exemption from import duty on raw materials.
Malaysia has set up state-backed halal industry parks to help investors. According to officials, the worldwide halal market is worth about $2.3 trillion and has huge growth potential.