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ANZ bullish on Asia IB and trade growth

ANZ bullish on Asia IB and trade growth

(23 September 2019 – Australia) ANZ is targeting transaction banking growth in quickly growing emerging Asian markets despite negative sentiment in the wake of the Hong Kong protests and simmering US-China trade war.

Senior ANZ executives report that business in Asia is growing again yet the bank has not disclosed plans for specific capital investment or acquisitions as was the approach under former CEO Mike Smith and his strategy to build a ‘super-regional’ Asian retail bank offering.

ANZ senior executives are exploring opportunities in Vietnam as it continues to establish itself as an alternative manufacturing centre to China. ANZ sees opportunities from a shift in regional supply chains caused by a move by some companies out of China to emerging markets such as Thailand and Vietnam. ANZ is also bullish on India’s prospects citing Prime Minister Narendra Modi’s strong offshore investment encouragement in addition to targeting new business from European corporates exasperated by the drawn out Brexit deliberations. After the group’s costly retail banking exit from Asia, its focus has firmly turned towards ratcheting up revenue from transaction banking, FX, trade finance and commercial lending to over 8000 customers based in fourteen countries across Asia.

The bank is targeting stronger customer retention and higher ‘wallet share’ by deepening ties with existing customers as opposed to prioritising ‘quantity over quality’. East & Partners Asia Institutional Transaction Banking, Trade Finance and Foreign Exchange reporting indicate average wallet share is falling for among the top 1,000 institutional enterprises in ten countries in the Asia Pacific (ex-Japan) as competition intensifies between the incumbent ‘Big 3’ of HSBC, Standard Chartered and Citigroup in addition to international banks and regional offerings.

ANZ management has spent the last three years cutting costs, staff numbers, customers and the amount of capital deployed in the region but said the business this year reached a turning point. Despite the slowdown in China’s economy, he said the opportunity for services and exports in the fast-growing region remained enormous. ANZ completed the sale of its 55 percent stake in a Cambodian joint venture last month and while maintaining the group’s institutional banking presence in Papua New Guinea (PNG) is expected to complete the exit of its retail and business banking divisions soon.

“We’re growing here again. The first six months was good. It has slowed a bit of late which we think is mainly the geopolitical issues which we think makes people reticent but it is still growing. We are not looking to buy anything but are we looking to put more assets on that will take some of our risk-weighted asset capital? Yes, but it will be for the right customers. We’ve had approval for the board to continue to grow. We have got a good clear strategy for the next three years. We know which customers we want to do that with. We are acquiring some new customers but it is really about deepening with the ones we have got” stated ANZ Group Institutional Banking CEO Mark Whelan.

“US President Donald Trump’s trade war with Beijing is not the only reason why companies are moving to other parts of Asia. Part of that may be an outcome of China-US trade but I think this has been happening for the last couple of decades as costs have gone up and as they move more towards higher value. Obviously that takes time but there is a huge drive to bring more investment. I think they will succeed. Our focus now is banking companies that are there. There are a lot of large global Indian companies who work with us across our footprint in Asia and Australia and we service that in all of those markets” quoted ANZ Group Executive International Farhan Faruqui.

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