The last month has seen unprecedented trading in Bendigo Bank’s shares.

Since the bank announced a half-year after tax profit of $53.2 million – and a dividend increase of 18.5% – on 13 February, its share price has increased by 12.9%, from $12.40 to $14.00 at last night’s close. The intra-day price peaked at $14.82 on 27 February – an all-time high for the stock.

Although yesterday’s trading volume of 107,038 was the lowest since 13 February, the average daily volume since then has been 299,039, which is well up on the average of 169,403 trades a day over the previous six months.

So what’s going on?

The bank’s shares are widely held, with many small shareholdings going back to the demutualisation of the Bendigo Building Society in 1995.

Under the Australian Stock Exchange rules, a predator will have to declare its identity when its beneficial interest exceeds 5% of the shares on issue, and approval from the federal Treasurer is required for any bank shareholder to increase its holding over 10%.

Bendigo’s current price earnings ratio of around 20 makes it an expensive acquisition at recent prices for any of the major Australian banks, but like St George Bank and, to a lesser extent, Suncorp-Metway and Bank of Queensland, Bendigo offers a ready-made retail branch network in the more populous eastern states for an overseas bank seeking to enter the Australian market or expand its local presence.

Among the latter, HSBC and HBOS can’t be ruled out, although HBOS seems to be pursuing an online, branchless strategy for its expansion on the east coast. A retail bank to complement RBS’s largely wholesale banking presence in Australia must also make it a possible contender.

Peter Fray

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