ANZ may sell minority stakes in Asia to lift capital – Deutsche
(7 July 2015 – Asia) ANZ Banking Group may look to sell its minority stakes in a couple of Asian banks to lift its capital, according to Deutsche Bank analyst Andrew Triggs.
Those on the list of possibilities include Panin Bank in Indonesia, of which ANZ has a 39 percent stake, or its 24 percent stake in AmBank Group in Malaysia, 14 percent stake of China’s Bank of Tianjin and its 20 percent holding in the Shanghai Rural and Commercial Bank, collectively these stakes tie up about A$5.3 billion of capital.
According to Australian Prudential Regulation Authority (APRA) rules, ANZ must fully deduct the equity of its Asian joint ventures from capital.
At 8.7 percent, ANZ's common equity tier 1 (CET1) capital ratio is well above the required minimum level of 8 percent, but it lags the other big Australian banks.
"We believe the sale of [Asian] partnership stakes is the key plank in ANZ closing the gap between its bottom of peer CET1 ratio and the higher capital ratios it will likely need to hold in the future," said Triggs in a note to the bank's clients on 2 July.
Triggs said it seemed more likely that the Panin and two Chinese stakes would be the ones to be sold, given ANZ's small stakes and lack of control.
However, the AmBank stake might be considered more strategic, he said, given difficulties of expanding organically in Malaysia.
In October ANZ chief executive Mike Smith said the A$800 million position in Panin was “untenable” and said ANZ could be a seller or a buyer.
ANZ has already sold its stakes in Vietnam, with its 17.5 percent stake in Saigon Securities sold last year and its 9.6 percent stake in Vietnam’s Sacombank offloaded in 2012.
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