I am announcing today my approval under the Financial Sector (Shareholdings) Act

1998 to the proposed acquisition of Colonial Limited by the Commonwealth Bank of

Australia (CBA).

This means that I am satisfied the acquisition is in the national interest taking into

account advice from the Australian Prudential Regulation Authority (APRA) ,the findings of

the Australian Competition and Consumer Commission (ACCC) inquiry into the proposed

acquisition, as well as undertakings the CBA made to the Commonwealth when seeking

approval.

APRA has advised that the proposed acquisition raises no significant prudential

concerns.

The ACCC has indicated that the anti-competitive effect of the acquisition that it had

identified can be effectively remedied through the various court enforceable undertakings

that the CBA has made to the ACCC under section 87B of the Trade Practices Act 1974.

These undertakings, which are summarised at Attachment A, will have the effect of

enhancing competition in the retail banking markets of Tasmania and rural NSW as well as

minimising the ability of the CBA to exercise market power in those markets.

The CBA made various undertakings to the Commonwealth in seeking approval for the

acquisition of Colonial. In particular, the CBA undertook: to retain Colonial State Bank

sites where there is no CBA branch within close proximity; in any country town where the

CBA or Colonial is the last bank in the town, the branch will be retained for at least the

next five years; and, in country towns, any amalgamated branch will be retained for at

least five years. Furthermore, the CBA undertook to ensure that there will be no

involuntary employment losses in Tasmania and rural and regional NSW as a result of the

acquisition of Colonial. In fact, there will be a net increase in employment in Tasmania.

I have accepted the CBA’s undertakings and made them conditions of the approval

under the Financial sector (Shareholdings) Act 1998 (FSSA). These conditions are at

Attachment B.

The proposed acquisition will have broader national benefits by creating a stronger and

more diversified financial institution with scope to generate greater operational

efficiencies, lower cost services and more diverse products for consumers.

Approval of the proposed acquisition under the FSSA will also be made

conditional upon the agreement of the shareholders of Colonial Limited to the proposal and

the endorsement of the relevant schemes of arrangement.

CANBERRA

30 May 2000

Contact: Niki Savva 02 6277 7340

any building, or other physical structure, owned, leased or

licensed by Commonwealth Bank of Australia, Colonial Limited, the State Bank of New South

Wales Limited trading as the Colonial State Bank or the former Colonial Trust Bank (or any

of their related corporations) at which Commonwealth Bank of Australia, the Colonial State

Bank or the former Colonial Trust Bank carries or carried on banking business.

any banking site at which Commonwealth Bank of

Australia, the Colonial State Bank or the former Colonial Trust Bank provides over the

counter banking services.

in relation to branches in rural and

regional Australia means equal to or less than 2.5 kilometres and otherwise means equal to

or less than 1 kilometre.

: 5 years commencing on the effective

date unless otherwise specified.

: any town in rural and regional Australia

outside the metropolitan area of an Australian State or Territory.

date: the date upon which the Scheme of

Arrangement between Colonial Limited and its ordinary shareholders becomes binding on

those ordinary shareholders of Colonial Limited in accordance with section 411 of the

Corporations Law.

: any person who is, on the effective date, an

employee of Commonwealth Bank of Australia or Colonial Limited or any of their related

corporations.

counts part time and casual

employees (as well as full time employees) but having regard to their working hours

compared to the standard working hours of a full time employee.

: the period of two years from the

effective date.

in

each State or Territory except Tasmania, means the metropolitan and suburban area of the

capital of that State or Territory; and in Tasmania means the metropolitan and suburban

area of Hobart and Launceston.

the same interpretation

as applies under the Redeployment and Redundancy provisions of the Commonwealth Bank of

Australia Enterprise Bargaining Agreement 1998.

the geographic region

of New South Wales other than the metropolitan area of New South Wales.

: the geographic region of

Tasmania other than the metropolitan area of Tasmania.

: the geographic region of

Australia other than metropolitan areas.

a branch of any Authorised Deposit

Taking Institution other than Commonwealth Bank of Australia or its related entities.

In these conditions the singular includes the plural and vice versa.

1.1 These conditions will continue for a period of 5 years commencing

on the effective date, subject to any specific time period set out in these conditions in

which case that latter time period prevails.

2.1 For at least the duration of the integration period, Commonwealth

Bank of Australia will retain any Colonial State Bank Branch or former Colonial

Trust Bank Branch where there is not a Commonwealth Bank of Australia branch

within close proximity at the effective date.

3.1 For the duration of the condition period, where there is at the

effective date a Branch in a country town and no third party branch in that country town,

Commonwealth Bank of Australia will retain at least one branch in that country town.

3.2 For the duration of the condition period, Commonwealth Bank of

Australia will retain at least one Branch in a country town where an amalgamation of

branches occurs in that country town during the integration period.

4.1 Commonwealth Bank of Australia will ensure that there is a net

employment increase in its employees in Tasmania by the end of the integration period of

460 full time equivalent positions. This commitment is on the terms agreed with the

Tasmanian Government in Commonwealth Bank of Australia’s proposal dated 7 April 2000.

 4.2 To this end, Commonwealth Bank of Australia will (itself or through any

related corporation) establish one or more new national call centres in Tasmania, with a

total of over 500 full time equivalent call centre positions being created.

5.1 Commonwealth Bank of Australia will ensure that, during the

integration period, no employee who is employed in rural and regional New South Wales or

rural and regional Tasmania will cease to be employed by Commonwealth Bank of Australia,

the Colonial State Bank or the former Colonial Trust Bank (as applicable) other than:

1. by resignation or voluntary exit by the employee;

2. by termination by the relevant employer because of the capacity or

   conduct of the employee;

3. where the employee has voluntarily accepted other employment or

   otherwise become employed by Commonwealth Bank of Australia or Colonial Limited or any of

   their related corporations; or

4. where the employee has been offered other employment by Commonwealth

   Bank of Australia, either at or within reasonable commuting distance from the place of

   business at which he or she was employed at the effective date, on similar terms to those

   applying to his or her employment by Commonwealth Bank of Australia, the Colonial State

   Bank or the former Colonial Trust Bank (as applicable).

5.2 If, at any time during the integration period, there would be fewer

employees (including for the purposes of this clause 5.2 part time and casual employees,

counted on a full time equivalent basis), employed in rural and regional New South Wales

than there were as at the effective date, Commonwealth Bank of Australia will ensure that

the number of employees employed in rural and regional New South Wales during the

integration period returns to the number so employed as at the effective date, for example

by establishing operations such as back office operations or call centres in rural and

regional New South Wales.

6.1 Commonwealth Bank of Australia will not be liable for any failure

to perform any obligation imposed by these conditions if the failure is due to Force

Majeure.

6.2 If Commonwealth Bank of Australia is by reason of Force Majeure

unable to perform an obligation under these conditions, Commonwealth Bank of Australia

will as soon as practicable and in any event within 30 days notify the Treasurer

specifying:

1. the cause and extent of non-performance;

2. the date of commencement of Force Majeure;

3. the means proposed to be adopted to remedy or abate the Force

   Majeure;

and will use all reasonable diligence and employ all reasonable means

to remedy or abate the Force Majeure as expeditiously as possible.

6.3 Force Majeure means:

1. any act of God;

2. war, revolution, or any other unlawful act against public order or

   authority;

3. an industrial dispute; or

4. a governmental restraint.

7.1 Commonwealth Bank of Australia will give written notice to the

Treasurer of the following matters as soon as practicable and in any event within 30 days

after the relevant occurrence:

1. the effective date; and

2. the commencement and termination or abatement of the Force Majeure.

Signed by Michael James Ullmer for and on behalf of the Commonwealth Bank of

Australia (ACN123 123 124)