ANZ May Spend As Much As $5 Billion on Asian Acquisitions

Post by Sharat on May 24, 2010 · Under Business News, Company News, Mergers & Acquistions, banking · Comment

Australian banking major ANZ says it is entering perhaps the most important stage of its regional expansion strategy, and may spend more than $5 billion on strategic acquisition stakes in the two Asian based bank’s that it is currently looking at.

Alex Thursby, the chief executive of the lenders international operations said that the chances of ANZ divesting its 49.5 per cent stake in Indonesia’s PT Bank Panin were nil, contradicting market speculation last week.

“There’ve been rumours suggesting that we could be a seller, but I can’t conceive of a scenario where that’s likely,” he said.

Currently ANZ has under ANZ has under consideration two multi-billion dollar deals for Asian based lenders, after having spent $660 million last year on acquiring some of RBS’s banking operations in the region.

Last week, ANZ emerged as the clear frontrunner to acquire the $1.4 billion,46 per cent stake in Panin Bank from the Gunawan family that has been put on the block.

ANZ currently has $4billion in excess capital, and that war chest currently makes it the most well capitalized Australian lender.

The lender is also currently looking at spending $4 billion on a majority stake in Korea Exchange Bank (KEB)

“We have built the capacity in terms of our overall strength. Two years ago, we could have done neither.” Mr. Thursby added

When taking the helm of ANZ, chief executive Mike Smith announced that the lender would embark on an ambitious strategy of transforming itself into a super regional lender, which would derive 20 per cent of its profits internationally, up from the current 12 per cent.

Mr. Smith says that such expansion would need to be achieved both organically and through acquisition, and that any target would need to meet three strict criteria: Firstly the business needed to be strategically significant, secondly the target would need to be able to create shareholder value during the medium term, and thirdly the target would need to be able to be easily integrated into ANZ’s existing operations.

Using that criteria, Mr. Thursby said KEB was not a perfect fit, because ANZ did not see Korea as critical for achieving its ambition of becoming a super regional lender, unlike China, Indian and other countries.

“It could be viewed as an opportunistic acquisition, but my sense is that both these opportunities will take some time to play out, the timing is not as obvious as some in the market might believe.” he said.

According to Mr. Thursby Indonesia remains one ANZ’s most important markets, after the lender aggressively built a presence there.

Not only does it have the stake in Panin Bank, which focuses on the mass market, but it also owns 99 per cent of the ANZ Panin Bank joint venture, which targets affluent Indonesians.

“A lot of people in Asia think Indonesia has a lot of upside,” Mr Thursby said. “We’ve invested in Panin for a number of years, going from 30 per cent to close to 40 per cent, so that gives some indication of our feelings towards the business. We’ve also spent a lot of time progressing its retail strategy and co-leading transactions on the institutional side.”

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