Eye of the tiger had a finger in the pie since 2003....ANZ has had a co-operation deal
in place since 2003, mostly focused on consulting and advisory
services connected with the bad loans and risk management.
ANZ's latest Asian asset sale is a solid start
Georgia Wilkins
4 January 2016
The latest instalment of the Australia and New Zealand Banking Group's sell-off of its Asian assets, a sale of a Chinese bank stake, has been welcomed by analysts as a "good start".
ANZ announced on Wednesday it would shed a 20 per cent stake in Shanghai Rural Commercial Bank for $1.8 billion.
The sale, to China COSCO Shipping Corporation and Shanghai Sino-Poland Enterprise, comes as the bank moves to shrink its business and scale back its presence in the region.
It will increase ANZ's capital ratio by 40 basis points, the bank said.
ANZ deputy chief executive Graham Hodges said the sale reflects the bank's strategy to simplify and improve capital efficiency.
"[It] will also allow us to focus our resources on our institutional banking business in Asia," he said.
Analysts said the sale signalled a willingness to push ahead with other divestment plans in the region, particularly in Malaysia and elsewhere in China.
"They were going to divest non-core assets and this is hopefully the start of something else. It's a good start," Bell Potter banking analyst TS Lim said.
ANZ's stake in the Chinese bank contributed $259 million to ANZ's post-tax profits last year.
The sale represents a price-to-book ratio of 1.1 times SRCB's net assets as at December 2015, the bank said.
ANZ announced in October it would sell a group of Asian retail banking and wealth businesses to Singapore's DBS Bank, including businesses in Singapore, Hong Kong, China, Taiwan and Indonesia.
It also announced in November it was considering selling key parts of its wealth management arm after it launched a strategic overview of the business due to disappointing returns.
The lender is leading a sector-wide push out of Asia, which has seen Australian banks cut their lending to key Asian economies by $US18.5 billion in the past two years, responding to investor pressure to ditch lower-returning assets and focus on their core domestic businesses.
Higher costs
Mr Lim said the sale was in line with the bank's strategy to pull back from the region, which had become more expensive since former chief executive Mike Smith's expansion plan began.
"Given that, and given the fact that the regulators here want banks to hold more capital, it makes sense for them to pull out of Asia and focus on Australia where returns are much better," he said.
Mr Lim said the bank would likely continue to divest other non-core assets in the region.
"Hopefully they can build off this momentum," he said.
ANZ still has a 12 per cent stake in the Bank of Tianjin, China, as well as a 39 per cent stake in PT Bank Pan, Indonesia and a 24 per cent stake in Malaysia's AMMB Holdings (AmBank).
Mr Hodges said the bank remained committed to the region, with 100 per cent ANZ-owned bank branches in China still serving institutional clients.
The sale will see COSCO and Sino-Poland Enterprise each acquire a 10 per cent stake in SRCB. It is subject to closing conditions and regulatory approvals and is expected to be completed by mid-2017.
Shares in the bank rose 1.7 per cent on the move, to close at $30.94 on Tuesday.
Shanghai Rural poised for makeover
By Luo Man and Jin Jing (China Daily)
Updated 2005-08-17
http://www.chinadaily.com.cn/english/doc/2005-08/17/content_469758.htm
SHANGHAI: A makeover of China's largest financial services co-operative next week will transform the Shanghai Rural Credit Co-operative Union into a full-fledged bank and pave the way for a potential capital injection.
The makeover is part of a countrywide overhaul of credit cooperatives that operate mainly in rural areas and are currently holding some US$200 billion in non-performing loans.
By transforming itself into a bank, Shanghai Rural would bring some 200 separate entities under one umbrella and be allowed to provide a full range of financial services to corporate clients and consumers. Shanghai Rural now has 326 branches in almost every district of Shanghai, except for Huangpu, Jing'an and Luwan.
"It is high time for this transformation," said She Minhua, an analyst at China Securities. Shanghai Rural has recovered from deficit in the last few years and has reached a capital scale level that would allow the transformation to work, she said.
The transformation into the Shanghai Rural Commercial Bank, expected on August 25, would pave the way for a partnership deal with the Australia and New Zealand Banking Group Ltd (ANZ).
ANZ has had a co-operation deal in place with the union since 2003, mostly focused on consulting and advisory services connected with the bad loans and risk management.
A partnership stake in Shanghai Rural would give ANZ wider access to the Chinese market and a pool of savings calculated in the trillions.
The Shanghai municipal government has stepped in to help Shanghai Rural with a total investment of 5.5 billion yuan (US$670 million), including land and capital. The shift will convert Shanghai Rural into a 100 billion yuan (US$1.2 billion) entity.
"We got 1 billion yuan in capital injections directly from the Shanghai Municipal Government," an anonymous senior official at Shanghai Rural told Reuters. "To introduce a strong foreign partner will be our next area of focus."
"The intention has been to invest after it becomes a bank," said Bob Zhu, ANZ's associate director for partnerships. "We would aim to be a minority shareholder." ANZ is also in discussions with another bank in north China, said Zhu, but declined to give further details.
There are thousands of credit co-operatives across China. According to the China Banking Regulatory Commission, credit unions across the country hold more than 3 trillion yuan (US$378 billion) in savings.
Combined, they are the fourth largest financial entity in the country, behind the Industrial and Commercial Bank of China, the Agricultural Bank of China and the China Construction Bank.
Shanghai Rural provides financial services for farmers, and focuses on the economic development of rural areas in and around Shanghai.
The restructuring of credit unions across the country started in 1997. In the last two years, institutions in 29 provinces have undergone some kind of trial transformation.
Some 43 banks across the countries have been created from the rural credit unions. Nine are rural commercial banks, 34 are cooperative banks and 13 are still undergoing approval.
Most have chosen to form provincial level financial institutions, except for unions in powerhouse financial centres Shanghai, Beijing and Tianjin