Westpac Banking Corp. said Monday it has approached rival St. George Bank Ltd. with a $14 billion takeover offer that could lead to the biggest shakeup of Australia's banking sector in years.

The all-stock deal would create Australia's largest financial services firm in terms of market capitalization, valued at almost 64 billion Australian dollars ($60 billion) based on Friday's closing prices.

St. George said in a statement it received Westpac's approach on Friday, and it expects to make a further announcement before the start of trading Tuesday.

Westpac is currently the third largest bank in Australia, while St. George ranks fifth by market capitalization.

The combined group would have some 10 million customers, a 25 percent share of Australia's home loan market and would be the nation's biggest wealth platform provider with funds under administration of 108 billion Australian dollars ($102 billion), Westpac said.

The planned takeover could top a bid by BG Group PLC for Origin Energy Ltd. as the largest proposed deal in Australia this year.

"St. George and Westpac are two highly successful banks, but we believe they would be stronger together in a way that allows both to harness the strength of each, while maintaining their unique identities and market positions," Westpac Chairman Ted Evans said in a statement.

Westpac said its proposal is for an all-equity deal worth 15 billion Australian dollars ($14 billion) but didn't provide any more details. At the close of trading Friday, St. George's market capitalization was 14.95 billion Australian dollars ($14 billion)).

Trading in Westpac and St. George shares was halted just before the announcement.

Westpac's new chief executive, Gail Kelly, a former chief executive of St. George, said a combined group would more effectively compete with rivals Commonwealth Bank of Australia, Australia and New Zealand Banking Group Ltd. and National Australia Bank Ltd.

"The increased scale and integration of operations would drive further investment in our back office processes ensuring more reliable, consistent and improved customer service," Kelly said.

Westpac is currently Australia's third largest bank by market capitalization, and with the Commonwealth, ANZ and National Australia forms what is known as the country's "big four" banks. Continued...