ANZ close to securing RBS Asian Assets
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Reports indicate that ANZ may be close to securing the key Asian assets of the Royal Bank of Scotland (RBS). ANZ have kept no secret of the desire to secure the assets but are keeping their lips tight at the moment and not revealing any information ahead of a possible announcement next week.
Should ANZ secure the assets it will be a massive boost for the plans of ANZ Bank to develop a super-regional bank that will better help it differentiate itself from the other Australian banks.
NZ Tax Bill to hot Australian Banks
New Zealand has been an unhappy hunting ground in recent years for Australia’s top four banks and it seems to be the case again with the big banks looking at a AUD$1.9 billion tax bill after a ruling by the New Zealand High Court.
The decision was against the National Australia Bank regarding sic structured finance transactions. While an appeal is a given the NAB are looking at needing to raise capital to cover the $550 million approx provision.
Justice John Wild said the transactions had “no commercial purpose or rationale”, other than to use the bank’s tax capacity to generate exempt income. The decision puts not only NAB but CBA, Westpac and ANZ on a collision course with regulators and a similar outcome.
It would seem ANZ and Westpac have adequate provisions already in case whereas CBA was less clear.
ANZ raise $2.2 billion in Share Purchase Plan
The ANZ Bank has pulled off an amazingly successful share purchase plan raising $2.2 billion from retail investors.
The retail share placement is the largest in Australian corporate history after a planned raising of $350 million. Investors in ANZ were allocated their full entitlement at $14.40 per share. The ANZ share price closed down over 2% today at $15.89 indicating some retail investors were already taking profits.
The share purchase plan takes the ANZ tier one capital to 9.5%, the largest of all the banks.
Australia’s Big 4 AA Rated
Australia’s Four Pillars in the banking sector has stood up amazingly well in the face of the global recession with the Commonwealth Bank, ANZ, Westpac and National Australia Bank all maintaining AA rated despite the global slump.
The big four remain as only eight international banks rated AA in the world.
ANZ Share Purchase Plan
ANZ retail investors can invest in the ANZ Share Purchase Plan offering investors the chance to subscribe for up to $15,000 worth of ANZ shares.
Shares can be applied for in lots of $1000 at a discounted price of no more than $14.40. With the current share price around $16.00 this offers investors an instant profit of around 10% at current market valuations.
The ANZ share purchase plan is likely to be well subscribed and scaled back applications would be unlikely considering banks would be happy to accept as much capital as possible from the market at the moment.
The deadline for applications is 2 July.
ANZ eye RBS Asian assets after $2.5 billion capital raising
ANZ has gone to the market and secured $2.5 billion in the space of 24 hours to support grand plans for securing the key assets from the Royal Bank of Scotland auction of it’s asian banking assets.
ANZ hopes to secure $2.85 billion in all, with a further $350 million to be secured through a share purchase plan. ANZ is competing with HSBC and Standard Chartered for the RPB assets but rumours indicate both failed to submit their bids for the assets by the cut-off date.
This would put ANZ at a strong advantage if the RBS wanted to quickly liquidate their assets. The raising of $2.5 billion was three times oversubscribed and at $14.40 per share, a discount of 7.5% to the stocks last trade of $15.57 before the announcement.
If successful in the bid the ANZ would secure a stronger position in Asia and would be well on the way to developing into the super-regional bank that CEO Mike Smith has been indicating since taking the helm.
Commonwealth Bank and Westpac dominate rival Big 4
The Australian publised a good article during the week indicating the amazing growth of retail deposits experienced by the merged CBA-BankWest which held a 40% share of retail deposits among the Big Four banks with a $137.1 billion deposit book, and the merged Westpac and St George banks had a 28% share with $98.6 billion.
Both Commonwealth and Westpac held a 68% share of the big four Australian banks retail deposits by March 2009 according to the review commissioned by Brandmanagement.
It was also revealed that the NAB has a $54.9 billion retail deposit book and ANZ a $56.4 billion book.
Which Australian bank has a plan for growth?
The Australian banking sector like the global banking sector has become risk averse and in a time where banks around the world are falling over the Australian banking sector still looks strong.
But if you were thinking a few years out and wanted to invest now, where would you put your money? The Australian banks have mostly followed the same path od de-risking and focusing on Australia so if you were investing you would want to consider what growth options they are aiming to access.
It would appear growth options are limited in Australia but and that NAB, Westpac and Commonwealth Bank all seem to be aiming at Australia for the future both short and long term. ANZ is the only bank that is aiming for a different path, they see growth in Asia as the major driver in the future.
ANZ have a defined strategy under Mike Smith, much like when McFarlane was in charge in the early days at ANZ. ANZ soon took the mantle of the best managed bank under McFarlane and I expect in a few years time people will be singing the praises of Smith.
Asia is a developing region and for business it is an area that needs to be invested in to benefit from growth as opposed to investing in old growth markets of Europe and Australia.
So which do you think is the best Australian bank if you are looking at a three to five year perspective?
ANZ announcement better than expected despite rise in bad debts
Banks cut rates in response to RBA decision
With the RBA cutting rates by 0.25% in April to 3.00%, a 49 year low, the bank gave a clear indication the market is nearing its low in the interest rate cutting cycle.
The RBA is likely to lower the offical cash rate by only another quarter to a half percent before it reaches the bottom of the rates cycle. From that point it will only stay low for a short period it would seem until rates start rising if previous recessions are anything to judge.
In response to the bank cuts Westpac, St George, Commonweath Bank and ANZ all cut their rates by 0.10%, NAB failed to pass on the cut. The decision by the banks gives the RBA some additional margin to cut further in a time when the economy is about to start the early phase of what is expected to be a short and sharp recession.
While all the banks have been under considerable funding pressure the majors have all come through this with a massive increase in market share as the expense of the second tier banks and the non-bank lenders. The majors now have easliy in excess of 90% market share and margins considerly higher then previosuly. Despite the rise of loan defaults the additional margins by the banks have given them a tremendous position of strength that few global banks share.
One thing is certain that the Australian banks are world leading and banks like ANZ who are looking to expand now into Asia are doing so from a position of strength that will setup growth for the next decade.