With RBS deal, ANZ gears up to take on HSBC, Citigroup

With RBS deal, ANZ gears up to take on HSBC, Citigroup
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First Published: Tue, Aug 04 2009. 09 08 PM IST
Updated: Tue, Aug 04 2009. 09 08 PM IST
Sydney: Australia’s fourth biggest lender, Australia and New Zealand Banking Group Ltd (ANZ), which on Tuesday agreed to buy Asian assets from Royal Bank of Scotland Group Plc. (RBS), is prepared to take on the likes of Citigroup Inc. and HSBC Holdings Plc as it expands in the region.
ANZ is going to be a regional player, chief executive officer Michael Smith said in a Bloomberg television interview. “I don’t want to take on HSBC or a Citigroup in Latin America or in the states (US) or in Europe, but if it’s in our backyard, in this region, then yes, we’ll take them on.”
ANZ Bank will pay $550 million (Rs2,613 crore) for the RBS businesses in Singapore, Taiwan, Indonesia, Hong Kong, the Philippines and Vietnam, the Melbourne-based bank said in a statement to the stock exchange.
RBS, based in Edinburgh, is selling or shutting businesses in two-thirds of the 54 countries in which it operates after posting the biggest loss in British corporate history last year. The acquisition will help Smith, who previously headed HSBC Holdings’ Asian division, towards his aim of doubling the proportion of income from Asia to 20%.
Smith is expanding abroad after ANZ Bank’s profit fell 28% to A$1.42 billion in the six months ended 31 March, from a year earlier, as credit impairment charges almost doubled to A$1.44 billion.
The RBS businesses represent 54 branches with $3.2 billion in loans and $7.1 billion in deposits serving about two million clients, ANZ Bank said in the statement. The bank, advised by Credit Suisse Group AG, is paying 1.1 times the recapitalized book value of the RBS assets, it said.
Even before the RBS deal, ANZ Bank had more investments in Asia than its Australian rivals, including stakes in Shanghai Rural Commercial Bank, Saigon Securities Inc. and Malaysia’s AMMB Holdings Bhd.
In China, ANZ Bank owns 19.9% of Shanghai Rural Commercial Bank and 20% of Tianjin City Commercial Bank. In March, the lender said it plans to open 20 branches in China by 2012 and is applying for regulatory approval to establish a wholly owned, locally incorporated bank subsidiary in the world’s third biggest economy.
Elsewhere in Asia, ANZ Bank owns 10% of Vietnam’s Sacombank, 38% of PT Panin Bank in Indonesia, and 40% of a credit-card venture with Metropolitan Bank & Trust Co. in the Philippines. It also started a bank in Cambodia through a venture with Royal Group.
Smith said he decided against pursuing RBS’ Indian assets due to potential regulatory hurdles, a declining credit outlook in the nation, and a lack of management expertise. The price for the RBS assets in China was just a bit too high and I couldn’t see how we could extract value, he added.
RBS remains in advanced discussions with bidders for the remaining assets it has decided to sell in Asia and will make further announcements when appropriate, the bank said in a statement on its website. It’s being advised by Morgan Stanley.
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First Published: Tue, Aug 04 2009. 09 08 PM IST
More Topics: ANZ | RBS | ABN Amro | Mike Smith | Corporate News |