ANZ sells Asian retail bank to Singapore’s DBS
ANZ is selling its retail banking operations in five Asian nations to Singapore’s DBS Bank, and will book a $265 million net loss on the deal.
The Australian bank has been looking to back away from the Asian strategy instituted by former chief executive Mike Smith since new boss Shayne Elliott took over at the end of last year. Both banks say the sale price is around A$110 million above the book value of ANZ’s retail banking and wealth management businesses in Singapore, Hong Kong, China, Taiwan and Indonesia. However, ANZ has confirmed it will book a loss of approximately $265 million in its accounts from the sale, including write-downs for software, goodwill and fixed assets, as well as various transaction costs.
On the plus side, the sale will free up funds within ANZ, increasing its key CET tier one capital ratio by 15-20 basis points, which should help it meet tougher new regulatory requirements from the Australian banking watchdog APRA.
“Our strategic priority is to create a simpler, better capitalised, better balanced bank focussed on attractive areas where we can carve out winning positions,” said Mr Elliott in a statement. He said the move is not an abandonment of Asia, but a switch away from retail customers to a greater focus on large business banking and trade finance.
“This transaction simplifies our business while allowing us to continue to benefit from higher levels of growth in the region through a focus on our largest, most successful business in Asia - banking large corporate and institutional clients driven by trade and capital flows particularly with Australia and New Zealand,” Mr Elliott added.
Pending various regulatory approvals, the sale of the different businesses to DBS is expected to start completing mid-next year, with both banks hoping to finalise the transfer in all markets by early-2018. ANZ investors were lukewarm on the deal, with the bank’s shares down 0.9 per cent to $27.38 by 11:11am (AEDT), a bigger fall than its big four rivals on a flat morning for the market overall.