ANZ likely to clinch RBS Asian deal this week

ANZ likely to clinch RBS Asian deal this week

Sydney: Australia and New Zealand Banking Group Ltd is likely to pay about A$930 million ($775 million) to buy some Asian assets from British lender Royal Bank of Scotland plc this week, a source briefed on the situation told Reuters on Monday.

The deal would mark ANZ’s biggest overseas purchase, cement its position as a regional bank and would be a key step in Australia’s fourth biggest bank’s goal to generate a fifth of its revenue from Asia by 2012.

ANZ has been in talks for weeks to buy retail and commercial banking operations in six Asian countries from RBS, which is selling assets to concentrate on its home market after racking up huge losses during the credit crisis.

“I think it will happen this week at some stage. This week is more likely," the source said. The source declined to be identified as the negotiations were confidential.

ANZ was pursuing assets in Hong Kong, Singapore, the Philippines, Indonesia, Vietnam and Taiwan, the source added. ANZ has spent about A$2 billion over the past decade in buying mostly minority stakes in banks from China to Vietnam.

ANZ’s Asian aggressive expansion is in contrast to the strategy adopted by the three top Australian banks, which have heavily relied on domestic growth.

ANZ was not in talks to buy RBS’s Indian and Chinese businesses, the source said.

“China and India just proved to be too difficult given that ANZ doesn’t have banking licence (for those countries) at this moment," the source added.

ANZ declined to comment on the progress on the talks or give details of the assets which it was pursuing.

An RBS spokeswoman in Hong Kong said: “We are well advanced with the sale process, however due to regulatory constraints and the confidentiality of the process we will not be commenting on any individual bidders or elements of the transaction process until its completion."

JP Morgan said in a report last week the Asian operations of RBS made a net loss in 2008 due to higher impairments and lack of operational efficiencies.

“RBS has a small number of branches across multiple geographies... across Asia. In our view, this is what appeals to ANZ in effectively holding the potential for a bolt-on acquisition across multiple geographies to strengthen their existing presence," the report added.

ANZ shares were up about 3%, in-line with the gains in its peers after Goldman Sachs JBWere upgraded its rating on Australian banks.

RBS, 70% owned by the British government, has put the assets up for sale as part of a plan to retreat to its home market and exit or shrink in up to 36 other countries.

Asia-focused Standard Chartered was in talks to buy RBS’s assets in China, India and Malaysia, a source told Reuters last month. RBS had initially planned to sell the entire group to one buyer for at least $2 billion.

Standard Chartered declined to comment on Monday.

ANZ raised about $2 billion in May to fund the potential acquisition, but some analysts have questioned the wisdom of an Asian deal with RBS minus the Indian and Chinese assets.