Executives from Australia and New Zealand Banking Group Limited (ANZ) and local partner Royal Group of Companies (RGC) both went into damage control yesterday after comments by ANZ chief executive officer Mike Smith suggesting the joint banking venture between the two was on the rocks.
Royal Group chief financial officer Mark Hanna said yesterday that the Cambodian conglomerate had a strong relationship with ANZ and there were no plans to break up the venture, ANZ Royal Bank.
“The Royal Group would like to clarify that it is a strong and committed partner to ANZ in Cambodia and will remain so. Together we have built a very successful franchise in Cambodia and we do not see that this will change,” Hanna said in an email.
“Our position is that we like the bank and have no desire to sell,” he added. “If they want to make a very high offer, it would be sensible to at least consider that. However as it stands today, no offer has been discussed, and it is business as usual.”
ANZ owns a 55 per cent stake in ANZ Royal Bank, which was started in 2005. Royal Group owns the rest.
It’s not the first time that the local firm, which is owned by Cambodian tycoon Kith Meng, has had to defend its businesses. For the better part of last year, the company fielded inquiries about its partnership with Philippines Airlines (PAL), which is helping to finance a joint venture to launch Cambodia Airlines.
The carrier, which aims to become the country’s second full-service airline after Cambodia Angkor Air, was supposed to start up in mid-2013 with a $1 million investment from PAL.
But closing dates in June and October were missed, and PAL’s chief executive officer was quoted as saying that the deal was on hold due to political instability in Cambodia.
A separate media report released in February, however, said the company denied it had shelved preparations for the carrier.
On March 3, a report from TMT Finance said that Mobitel, the telecommunications arm of Royal Group, was seeking outside investment.
Royal Group, however, denied this in the same report.
The latest round of questions emerged after The Sydney Morning Herald reported on Monday evening that Smith, the ANZ CEO, said the company would pursue a similar tact in Cambodia as it had with Vietnam’s Sacombank in 2012.
“We got out of a relationship, a small relationship, in Vietnam,” Smith said in Hong Kong, according to a Reuters report on the remarks. “We would like to do the same in Cambodia. I’d much rather have a wholly owned business in these places.”
Smith’s comments came months after two audits revealed that ANZ Royal Bank had financed ruling party senator Ly Yong Phat’s Phnom Penh Sugar Company, and more than a year after Post reporters found children labouring on the sugar plantation.
Launched in 2010, the Phnom Penh Sugar Company has been at the centre of a years-long land dispute over forced evictions from its concession in Kampong Speu province.
Of the two audits, the second showed that 60 per cent of recommendations made after the initial findings, on issues ranging from worker safety to sanitation, had not been addressed.
Appearing on Sky News yesterday, Smith said his comments were “taken out of context,” though he went on to reiterate the bank’s desire to fully own its business without a local partner, which in this case is Royal Group.
“What I’ve always said is that for [the] minority interest that we have held, we always look to seek a way towards control and where possible to wholly own those businesses, and that is exactly the same in Cambodia. I’d like to get … 100 per cent of it,” he told interviewer Brooke Corte.
“You are not currently actively looking to exit that stake, then?” Corte then asked.
“No. I mean, Cambodia is still an important country in Asia. It is still a very nascent economy. It’s got a long way to go. But I do believe that the potential for the medium and longer term will be good, but I’d rather have [a] 100 per cent owned business,” Smith responded.
ANZ could either buy out Royal Group or sell its shares and start its own venture. ANZ Royal Bank’s CEO Grant Knuckey told the Post on Monday, however, that there was no deal currently on the table.
Hanna, Royal Group’s CFO, reiterated the firm’s stance yesterday.
“With ANZ Royal being a very successful bank, it is natural that ANZ would like to own more of it.
“This has been ANZ’s position for some time, so this is not a new development, nor has it ever impacted Royal Group’s relationship with ANZ which continues to be healthy,” he said.