Australia's second biggest bank by market capitalisation, Westpac Banking Corphas said on Friday that it has agreed to acquire Australian assets from Lloyds Banking Group in a deal valued at A$1.45 billion or $1.37 billion.

The acquisition will be the largest for Westpac since its 2008 takeover of St George Bank. It will allow Westpac to expand its presence in motor vehicle finance, equipment finance and corporate lending in the country. Lloyds is refocusing on its operations in the UK and this offers an attractive deal for the Australian bank to acquire assets at a cheaper price.

Westpac Chief Executive Gail Kelly said in a statement that, "This is a value creating, straightforward transaction that makes both commercial and strategic sense. These are strongly performing businesses that we know well and that will expand our reach and capability in target segments."

Westpac said that the entire deal will be internally funded and pointed out that the acquisition will benefit full-year earnings per share in 2014. It also expects the new assets to add A$100 million to cash earnings by 2015 for the Australian bank.