ANZ offloads majority stake in Cambodian JV
The Australian 9:23pm May 17, 2018
Michael Roddan
ANZ has sold its majority stake in a Cambodian joint venture in a move that further unwinds the bank’s exposure in the region.
The sale of a 55 per cent stake in ANZ Royal Bank to Japanese financial house J Trust was booked at a $30 million loss.
Significantly, the sale removes a thorn in the side of ANZ just as all banks are coming under scrutiny in Australia.
ANZ was exposed to a furore in 2014 over the commercial relationship between ANZ Royal Bank and exploitative Cambodian company Phnom Penh Sugar. ANZ Royal provided a loan facility to PP Sugar worth tens of millions of dollars to partly fund the establishment of a new sugar plantation and refinery.
But the relationship broke down over the company’s inadequate response to a detailed project plan developed by ANZ, designed to remedy longstanding concerns surrounding the agribusiness company over allegations of child labour and military-backed land grabs. The practices were condemned by non-government organisations in Cambodia and became the subject of headlines in Australia. Eventually, pressure applied by ANZ Royal resulted in PP Sugar refinancing with another lender.
ANZ said its decision to sell the stake was in line with its ongoing strategic review of international partnerships, in order to simplify the business and operate wholly-owned institutional businesses in the region.
In recent years ANZ chief Shayne Elliot has overseen sales of its stakes in Metrobank Card Corporation in the Philippines and Shanghai Rural Commercial Bank in China, as well as its Australian life insurance and superannuation businesses. This is a reversal of the “super regional” Asian growth strategy of previous chief executive Mike Smith.
“This joint venture has been beneficial to both ANZ and the Royal Group over the past 13 years, with ANZ Royal now a strong and successful bank,” said Farhan Faruqui, ANZ’s group executive of international.
“We view the business environment in Cambodia as attractive and recognise it’s an important growth economy in the ASEAN region, however the sale is in line with our efforts to exit minority investments and partnerships to focus on our institutional business in Asia,” Mr Faruqui said.
“Our regional network is an important differentiator for ANZ and key to our ambition to be the best bank to support companies with trade and capital flows throughout the region.”
“We remain committed to our Institutional presence in Asia. Our regional network is an important differentiator for ANZ and key to our ambition to be the best bank to support companies with trade and capital flows throughout the region,” Mr Faruqui said.
ANZ will continue to own its 55 per cent stake and manage the ANZ Royal business for up to 12 months as it transitions to J Trust.
J Trust is a Japanese diversified financial holding company listed on the Tokyo Stock Exchange.