Westpac will pay $1.45 billion to purchase Lloyds Banking Group's Australian motor and equipment finance business.
Under the deal, Westpac will acquire Capital Finance Australia Ltd (CFAL), along with its corporate loan portfolio from the British bank, by December 31 this year.
CFAL has a motor vehicle finance book of $3.9 billion, an equipment finance book of $2.9 billion, and a corporate loan portfolio of $1.6 billion.
Westpac chief executive Gail Kelly said the deal would expand the bank's capability and reach within the equipment finance sector.
Meanwhile, CFAL's vehicle finance arm, which focuses on rural and regional areas, would fit well with the existing motor finance business of Westpac subsidiary St George, which focuses on metropolitan areas, the bank said.
"This is a value creating, straightforward transaction that makes both commercial and strategic sense," Mrs Kelly said.
"These are strongly performing businesses that we know well and that will expand our reach and capability in target segments," Mrs Kelly said.
Westpac said the acquisition was expected to add $100 million in cash earnings to its business by the 2015 financial year.
The bank said the deal was not subject to regulatory approvals but it had notified the consumer watchdog, the Australian Competition and Consumer Commission, of the transaction and was co-operating with its informal merger review process.
