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.

Fiji Sun - - Business -

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.

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