ANZ Capital Raising Weighs Down Its Shares

Post by Sharat on October 2, 2008 · Under banking, news · Comment 

ANZ Banking Group underperformed today despite the broad based rally on the ASX of nearly 5%. The bank which raised over $1 Billion from institutions finished up 2.9% on very light banking stock volumes and was about 2% lower than the rest of its peers and the broader market during intra-day trade.

Contrastingly, rivals Commonwealth Bank of Australia closed up over 5.25 % Westpac over 8.24% and St. Georges Bank, rose 6%.

ANZ and NAB are bouth thought to hold significant CDO portfolios and the market is treating them with a little suspicion as a result. NAB announced earlier in the day that it had hedged its CDO portfolio with a global bank. It is being speculated that the reason for Tuesday’s capital raising activities of ANZ was that the bank was holding structured products know as conduits on its balance sheet and wanted to shore up capital as a result. A conduit is a structured product based on commercial paper.

The capital raising has resulted in some negative sentiment in the market and the perception is the find raising occurred because the bank is need of cash. It is in no way being suggested that ANZ is either going under or going to fail. Rather there is a fear that it will suffer additional write downs that will inhibit its short term profitability.

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