ANZ exposed to US
(19 February 2008 – Australia) ANZ has announced a series of potential losses, primarily $US200 million (A$219 million) from a deal with a US debt insurer ACA Capital Holdings.
ANZ entered into derivative transactions between 2005 and 2007, buying and selling credit protection. ACA Capital, one counterparty to the deals has subsequently been downgraded to a CCC credit rating.
ANZ said that while ACA Capital has been downgraded to non-investment grade, it is likely a substantial portion of this provision will be written back in future periods.
The total announced exposure is a A$365 million provision for bad debts. The second part of this is A$90 million set aside to protect the bank in the event that Centro Properties Group defaults on part or all of its $3.6 billion debt.
The final amount is an increase in a provision for bad debt made last year following the collapse of Lafayette, a polymetallic mining company. The amount of this provision is now set at A$51 million.
ANZ Chief Executive Officer Mike Smith said that good performances at ANZ in the Personal and Asia divisions, a turnaround in the Institutional business, and solid results from New Zealand have been overshadowed by higher credit costs on commercial lending.
Smith also added that while ANZ are progressing well, they previously warned to have not been immune from global market issues, including uncertainty around funding costs.
ANZ said that while ACA Capital has been downgraded to non-investment grade, it is likely a substantial portion of this provision will be written back in future periods.
The total announced exposure is a A$365 million provision for bad debts. The second part of this is A$90 million set aside to protect the bank in the event that Centro Properties Group defaults on part or all of its $3.6 billion debt.
The final amount is an increase in a provision for bad debt made last year following the collapse of Lafayette, a polymetallic mining company. The amount of this provision is now set at A$51 million.
ANZ Chief Executive Officer Mike Smith said that good performances at ANZ in the Personal and Asia divisions, a turnaround in the Institutional business, and solid results from New Zealand have been overshadowed by higher credit costs on commercial lending.
Smith also added that while ANZ are progressing well, they previously warned to have not been immune from global market issues, including uncertainty around funding costs.
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