CORRECT: ANZ Bank Raises A$2.5 Billion To Help Fund RBS Asset Bid
May 27 2009 - 12:27PM
Dow Jones News
Australia and New Zealand Banking Group Ltd. (ANZ.AU) Wednesday
raised A$2.5 billion by selling new shares to help fund its bid to
buy Asian banking assets from Royal Bank of Scotland Group PLC
(RBS).
The successful institutional placement, which will be followed
by a A$350 million offer to retail shareholders, 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.
Earlier, 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.
As planned, ANZ raised 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 said late Wednesday that
the placement was "significantly oversubscribed", attracting
support from a wide range of institutions.
The A$350 million share purchase plan for retail investors is
open to ordinary shareholders registered as of June 1. ANZ said it
would provide further details on the share purchase plan to
eligible shareholders.
Strong interest in the large offer could help limit any downside
to ANZ's shares when they resume trading Thursday.
Southern Cross Equities analyst T.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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