Reach exposure won’t affect earnings, ANZ says
(22 June 2004 – Australia) ANZ has said its earnings guidance won’t be affected by a A$115 million credit exposure to failed Telstra venture, Reach.
Responding to Telstra’s decision last week to end its relationship with Reach – an underwater cable joint venture with Hong Kong telco PCCW which is unable to pay its US$1.2 billion debt – ANZ said additional provisioning associated with the settlement between Reach and its syndicated bankers was not material to ANZ.
The bank said the settlement between Reach and its bankers would result in it making a further specific provision of about A$50 million in the current half and that it had raised a specific provision for Reach in its first half results.
"The Reach credit loss is extremely disappointing. ANZ’s role in the banking syndicate was a result of our domestic banking relationship with Telstra at the time and their formal request for our participation," ANZ chief operating officer Dr Bob Edgar said.
He said ANZ had reduced its exposure to the telco sector over recent years and it represented less than one percent of the bank’s lending assets. He said more than two thirds of ANZ’s exposure to the sector was in domestic assets in Australia or New Zealand.
"This has been part of a long term strategy to materially improve overall average credit quality by the derisking of offshore portfolios, reducing client concentration risk and increasing the emphasis on personal lending assets," Edgar said.
The bank said the settlement between Reach and its bankers would result in it making a further specific provision of about A$50 million in the current half and that it had raised a specific provision for Reach in its first half results.
"The Reach credit loss is extremely disappointing. ANZ’s role in the banking syndicate was a result of our domestic banking relationship with Telstra at the time and their formal request for our participation," ANZ chief operating officer Dr Bob Edgar said.
He said ANZ had reduced its exposure to the telco sector over recent years and it represented less than one percent of the bank’s lending assets. He said more than two thirds of ANZ’s exposure to the sector was in domestic assets in Australia or New Zealand.
"This has been part of a long term strategy to materially improve overall average credit quality by the derisking of offshore portfolios, reducing client concentration risk and increasing the emphasis on personal lending assets," Edgar said.
Subscribe