Australia's competition watchdog said Wednesday it will not oppose a merger between Australia's St. George Bank Ltd. and Westpac Banking Corp.

Australia's fifth-largest bank, St. George Bank Ltd., on Tuesday reaffirmed its fiscal 2008 earnings guidance after posting a 12.5 percent rise in cash profit for the first 10 months of its financial year.

Westpac Banking has agreed to proceed with a bid worth about $16 billion for St George Bank, the biggest banking takeover in Australia, after completing due diligence, the banks said on Monday.

Westpac Banking Corp agreed to pay $17.6 billion in shares for smaller rival St George Bank in a tie-up that will create Australia's largest bank by market value.

Westpac Banking Corp, Australia's fourth-biggest lender, said it had entered talks on an all-share bid for St George Bank, which has a market value of $14 billion, to create Australia's largest home lending and wealth management provider

Westpac Banking, Australia's fourth-biggest lender, met analysts' forecasts with a 10 percent rise in first-half core profit, driven by growth in business and consumer lending.