2nd UPDATE: ANZ Bank Bids For RBS's Asia Operations; To Raise A$2.85 Billion
May 26 2009 - 9:37PM
Dow Jones News
Australia and New Zealand Banking Group Ltd. (ANZ.AU) said
Wednesday it will raise up to A$2.85 billion by selling new shares
to help fund its bid to buy Asian banking assets from Royal Bank of
Scotland Group PLC (RBS).
The share placement will also boost ANZ's capital position and
help cushion against rising bad debts, with the bank warning that
charges for bad debts will rise around 20% in the second half from
the first half.
Melbourne-based ANZ said in a statement it has lodged a
non-binding bid to buy "selected" assets from RBS, which is selling
retail and commercial banking businesses in eight countries around
the region, including the key markets of India, China and Hong
Kong. The bank didn't say which assets it bid for, but said a deal
could weigh on earnings per share in the near term.
Despite volatile global financial markets, ANZ is pushing ahead
with plans to become a "super regional" lender in Asia as it looks
for new avenues of growth.
ANZ will raise A$2.5 billion through an underwritten
institutional share placement, at A$14.40 a share - a 7.5% discount
to its last traded price of A$15.57. It will also raise up to A$350
million through an offer to retail investors through a share
purchase plan.
Southern Cross Equities analystT.S. Lim said that while HSBC and
Standard Chartered are also in the hunt for RBS's Asian operations,
they may not be interested in all the assets on the block, which
could allow ANZ to secure some businesses. These might include
RBS's Indonesian and Singaporean units, he said.
ANZ said there is no certainty its bid will succeed, and that it
applies a "disciplined approach" to assessing investment
opportunities.
"An acquisition of the selected RBS Asia assets would initially
have a modest negative impact on reported earnings per share but
over the medium term the impact would be expected to be positive,"
the bank said.
If the RBS transaction proceeds, ANZ said its Tier 1 capital
ratio immediately afterwards would remain above its target range of
7.5% to 8.0%.
ANZ's major Australian rivals have all boosted their capital
positions in recent months, looking to build a buffer against
rising bad loans as Australia heads towards its first recession in
almost 20 years.
"The banking outlook remains uncertain and difficult to predict
especially with respect to credit provisions, revenue and the
market value of securities and derivatives," ANZ said.
While Australia's major banks have largely avoided the
credit-related troubles of their international peers, bad debts are
rising quickly and offsetting growth in revenues across the
sector.
ANZ said it expects second half provisions for bad debt will be
around 20% higher than the A$1.44 billion recorded in the six
months to March 31, with the commercial segment feeling increasing
pressure.
The bank said market conditions in New Zealand remain
challenging and it anticipates some further margin decline in the
second half in that market.
The company said its capital raising would initially boost its
capital ratios by around 90 basis points.
Southern Cross's Lim said that, while the outcome of the RBS
asset sales process is uncertain, ANZ probably decided to go ahead
with its capital raising after Australian authorities lifted a ban
on the short-selling of financial stocks. He said that not doing so
could have left the stock vulnerable to speculation that a share
placement was likely.
-By Lyndal McFarland, Dow Jones Newswires; 61-3-9292-2093;
lyndal.mcfarland@dowjones.com
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