UPDATE: ANZ Bank May Take Another Look At RBS Assets In China

Australia & New Zealand Banking Group Ltd. (ANZBY) may take another look at Royal Bank of Scotland Group PLC's (RBS.LN) banking assets in China after Standard Chartered PLC pulled out of talks to buy the operations, a spokesman for the Melbourne-based bank said Tuesday.

"Our chief executive Mike Smith has previously said ANZ would be prepared to look at the RBS assets in China if financial sense could be made of that," the spokesman said.

"At present, however, our priority is around regulatory approvals and integration planning for the assets in the six countries where we have already reached agreement with RBS," the spokesman said.

ANZ Bank isn't currently in any discussions with RBS on the China operations, he said.

Smith, a former HSBC executive, wants to transform Melbourne-based ANZ into a "super regional bank" competing with the likes of HSBC and Citigroup. He hopes to generate 20% of ANZ's revenues from Asia by 2012 amid intense competition and slowing loan growth in its home markets.

In what it described as a stepping stone into the region, ANZ agreed in August to buy some of RBS' retail and commercial banking operations in Asia for US$550 million.

Under that deal, ANZ 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 baulked at buying the China operations due to price, Smith said at the time.

ANZ already has some presence in China. It holds banking licenses in three major cities, and holds stakes in Bank of Tianjin and Shanghai Rural Commercial Bank. It is also in the process of getting local incorporation in China.

Talks between Standard Chartered and RBS for the sale of RBS' assets in China, India and Malaysia failed over price, a person familiar with the matter told Dow Jones Newswires Saturday.

The person said Standard Chartered was willing to pay US$200 million to US$250 million for the assets, but RBS was expecting much more.

ANZ Bank still has significant cash to help fund any acquisitions, even after striking a EUR1.1 billion deal last month to buy out its Australian wealth management venture partner ING Groep to boost its share in the fast growing sector.

Australia's well capitalized banks have been taking advantage of the distressed positions of some of their global peers to build market share.

ANZ has indicated that it isn't interested in RBS' banking operations in India at this stage, given it doesn't have a banking license in that country.

"While India remains a priority market, our immediate focus there is working to progress the application for a banking license that ANZ made in late 2008," the spokesman said.

-By Lyndal McFarland, Dow Jones Newswires; 61-3-9292-2093; lyndal.mcfarland@dowjones.com

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