Logo of Phnom Penh Post newspaper Phnom Penh Post - ANZ to sell $2bn in shares to fund RBS Asia buyout

ANZ to sell $2bn in shares to fund RBS Asia buyout

ANZ to sell $2bn in shares to fund RBS Asia buyout

090528_15.jpg
090528_15.jpg

ANZ Bank planning to further expand presence in Asia-Pacific with

proposed acquisition of Royal Bank of Scotland’s regional assets

Photo by: TRACEY SHELTON

Bank clerks work in an ANZ Royal branch in Phnom Penh in this file photo. ANZ’s proposed acquisition of RBS’ Asian assets will increase its regional presence.

AUSTRALIA and New Zealand Banking Group Ltd, the nation's fourth-largest lender, plans to raise A$2.5 billion (US$2 billion) selling shares to fund a bid for Royal Bank of Scotland (RBS) Plc's Asian assets.

The Melbourne-based bank will sell the shares to institutional investors at A$14.40 each, a 7.5 percent discount to its last traded price, and will not increase the size of the offer, it said in a statement Wednesday.

CEO Mike Smith, who joined ANZ after running HSBC Holdings Plc's Asian operations, is raising funds as Australia's economy sinks to its first recession in 18 years. ANZ is up against HSBC and Standard Chartered Plc in its bid for RBS's Asian assets, which range from trading desks in Australia to bank branches in Pakistan.

"Buying distressed financial assets at a weak point in the market is a good strategy, but you have to have the financial strength to run the business through the remainder of the trough," said Angus Gluskie, who manages about A$260 million at White Funds Management Pty in Sydney.

The placement has been underwritten by Deutsche Bank AG, JPMorgan Chase and Co, and UBS AG.

The bank will also sell equity to retail shareholders and reserve the right to scale back applications under the share-purchase plan if total demand exceeds A$350 million.

In Wednesday's statement, ANZ said its charge for credit derivatives losses had declined by about A$400 million after tax since March 31, reflecting lower credit spreads globally and a stronger Australian dollar. That improvement has been "largely offset" by a reduction hedging gains, it said.

On April 16, ANZ confirmed it had been invited by RBS to participate in the sale process for the lender's Asian assets.

Obtaining the Edinburgh-based bank's Asian businesses may help Smith meet a goal of boosting the portion of revenue earned in Asia to 20 percent at a time swelling bad debts squeeze ANZ's domestic profits.

RBS, Britain's biggest government-owned bank, this month posted a first-quarter loss after writing down £4.9 billion ($7.8 billion) as credit-market investments soured and bad loans increased in all its markets.

The bank serves more than 30,000 retail and commercial customers in China and is one of the ten biggest foreign-owned wholesale banks in the nation, according to its Web site. In India, it serves 1.3 million customers, while in Indonesia, it has 360,000 customers, the site says.

ANZ's capital raising is "a positive thing to do", said Peter Vann, who manages more than A$600 million at Constellation Capital Management Ltd in Sydney. On the RBS bid, Vann said "if it's a sensible price and the deal stacks up, I'm happy. It's a good time to buy something, it's cheap".

ANZ, which didn't say which RBS assets it is pursuing, said an acquisition would initially reduce earnings per share before contributing to profit in the medium term.

The share sales would allow ANZ to fund an acquisition of the selected RBS Asia assets while maintaining its Tier 1 capital ratio, a key measure of financial health, above its target range of 7.5 percent to 8.0 percent, it said. BLOOMBERG

MOST VIEWED

  • Ethnic group ‘disappointed’ to be denied French visas to attend court

    Eleven people at the centre of a case involving seven indigenous Bunong villages in Mondulkiri province pursuing legal action in France have expressed disappointment after the French embassy in Phnom Penh denied their visa applications to attend court. A press release said the 11 included a

  • Cambodia nabs 12th place in best retirement destinations

    Cambodia is an expatriate hotspot for those dreaming of living a more luxurious lifestyle at an affordable cost, according to International Living’s Annual Global Retirement Index 2019. For the fourth year in a row, Cambodia took the top spot in the Cost of Living category.

  • EU starts EBA withdrawal

    The EU on Monday announced that it has begun the 18-month process of withdrawing the Kingdom’s access to its preferential Everything But Arms (EBA) agreement over “a deterioration of democracy [and] respect for human rights”. However, the Garment Manufacturers Association of Cambodia (GMAC) said

  • PM: War result of foreign meddling

    Prime Minister Hun Sen said on Sunday that Cambodia’s recent history of conflict was caused by foreign interference. “The wars that happened were caused by provocation, incitement, support, smearing and interference from foreign powers, and the group of ignorant people who pushed Cambodia to