Australia & New Zealand Banking Group Ltd. (ANZ.AU) said
Tuesday it will pay US$550 million for some of Royal Bank of
Scotland Group PLC's (RBS) Asian banking operations in what the
group described as a stepping stone into the region.
The Australian lender could also look at further deals in the
region to help it achieve its ambition of becoming a significant
player in the Asian market.
ANZ Bank said it will buy RBS' retail and commercial banking
operations in Taiwan, Singapore, Indonesia and Hong Kong, and its
institutional businesses in Taiwan, the Philippines and
Vietnam.
But it is not buying operations in India or China - considered
by some as the jewels of RBS' Asian business - given a combination
of price and a lack of banking licenses in those two nations, ANZ
Chief Executive Mike Smith said.
RBS said in a statement it "remains in advanced discussions with
bidders for the remaining assets it has decided to sell in Asia and
will make further announcements, as appropriate, in due
course."
People familiar with the situation have said that RBS is in
talks to sell its retail and commercial banking operations in China
and India to Standard Chartered PLC (STAN.LN).
"The acquisition of these RBS businesses is a further stepping
stone in our super regional strategy and creates a new platform for
our retail and wealth businesses in Asia," ANZ's Smith said in a
statement.
"This acquisition is consistent with our strategy and involves
the businesses that we wanted from the RBS sale process, in markets
that we know well, with regulatory approval processes which we
believe are achievable for ANZ," he said.
But analysts said that if Smith is serious about transforming
Melbourne-based ANZ - Australia's fourth largest lender by market
capitalization - into what he describes as major force in Asian
banking, he'll have to look at further acquisitions.
ANZ already owns stakes in several banks around the region,
including a 19.9% stake in Shanghai Rural Commercial Bank, an 85%
stake in Indonesia's PT ANZ Panin bank and a 20% stake in AmBank in
Malaysia.
Smith said that the RBS deal boosts ANZ's critical mass in Asia,
but is not transformational for the group or its strategy in the
region.
Smith told Dow Jones Newswires he expected there to be further
acquisition opportunities in Asia as foreign banks sell assets to
shore up their retrench in their domestic markets after the global
financial crisis.
"There are one or two things on the horizon," he said. "There
are a few (opportunities) around."
Smith added that ANZ was also looking at acquisition
opportunities in Australia, and said he was still keen to pursue
opportunities to expand in both India and China.
He told Dow Jones Newswires ANZ had felt that integrating RBS'
Indian operations would have been too complex, while the operations
in China were too expensive. But he said that ANZ would consider
future opportunities to expand through acquisition in both
countries, though its organic growth in China was "going well".
Smith, a former HSBC executive, aims to generate 20% of ANZ's
revenues from Asia by 2012 amid intense competition and slowing
loan growth in its home markets.
Not A Super Regional Bank Yet
Analysts expect the lender to look at further deals in Asia,
with Citi analysts noting the bank is "not a super regional
yet."
"While this (RBS) is a good deal, more will likely be required
to achieve the super-regional vision and the goal of 20% of
earnings from Asia by FY12," Citi analysts said.
There is speculation that ANZ could look at ING Groep NV's (ING)
private banking business in Asia.
"Views in the market suggest these assets would represent a
compelling strategic fit, especially considering the RBS asset
purchases," IG Markets analyst Ben Potter said.
ANZ is also hoping to get a banking license to operate in India,
and Smith said the group is making progress on achieving local
incorporation in China.
Under Tuesday's deal, ANZ will triple its customer base in Asia
to an estimated 3 million clients from the current 1 million.
It will also add 54 branches, US$3.2 billion in loans and,
perhaps most importantly, US$7.1 billion in deposits.
The assets being acquired recorded a profit of A$127 million in
the most recent 12 months before provisions. Provisions totaled
A$238 million, ANZ said.
In addition to the purchase price, ANZ will have to tip around
US$650 million more into the assets to be acquired to boost their
Tier 1 capital levels to 8%.
ANZ said the deal is expected to be cash earnings per share
accretive within two years after the deal is completed - expected
by the second quarter of 2010.
ANZ's head of Asia Alex Thursby said the RBS deal presents
significant opportunities to add to the group's growth in the
region.
"We are well advanced with integration plans for each country so
we can hit the ground running," Thursby said.
"This will involve putting the RBS businesses onto a sustainable
footing by centralizing hub operations and technology, business
model transformation in retail and institutional, and exploiting
the significant business opportunities associated with the combined
business," he said.
Retention agreements have been put in place with key RBS
employees, ANZ said.
The sale of the assets is a step in unwinding RBS' partial
acquisition of ABN AMRO. The US$101 billion, peak-of-the-market
deal was spearheaded by RBS and is widely seen as the strategic
misstep that led to RBS' downfall and the ouster of former chief
executive Fred Goodwin. RBS will retain its presence in about a
dozen markets in Asia.
RBS head of Global Banking & Markets for Asia Pacific, John
McCormick, said RBS will continue to be a global wholesale,
transaction and private bank, with a significant presence in Asia
in the 11 markets that account for 90% of its revenues in the
region.
Credit Suisse acted as financial adviser to ANZ on the
acquisition, which remains subject to regulatory approvals.
-By Lyndal McFarland, Dow Jones Newswires; 61-3-9292-2093;
lyndal.mcfarland@dowjones.com
(Andrew Peaple in Beijing contributed to this article)
Australia And New Zealan... (ASX:ANZ)
Historical Stock Chart
From Jul 2024 to Aug 2024
Australia And New Zealan... (ASX:ANZ)
Historical Stock Chart
From Aug 2023 to Aug 2024
