After several years of telling shareholders and analysts that it is pulling back from Asia, ANZ has now started a revised narrative: that it’s here to stay.
The bank is holding a two-day finance and treasury forum in Singapore designed to reposition it as a thought leader at the heart of the markets.
It seems at odds with three years of headlines about cutbacks, divestments, retrenchments and retreats, but actually the two positions are not incompatible. ANZ still wants out of retail businesses and minority bank stakes in the region, but wants to stick around and grow in institutional banking.
Mark Whelan, ANZ
“One of the constant frustrations for us is that while we have been shaping the business, many have had the impression we have been exiting Asia,” says Mark Whelan, group executive, institutional, at a briefing ahead of the event.
“We’re still in 15 countries here and committed to them. We haven’t exited. If anything, we’re expanding.”
ANZ has shifted a lot of what it wanted to – all the old RBS businesses to DBS, a 20% stake in Shanghai Rural Commercial Bank, and most recently the stake in its joint venture in Cambodia to Japan’s J Trust – but there are two stubborn assets still on the books.
One is its stake in the Malaysian lender AmBank, where one big problem is the bank’s links to the 1MDB scandal, under renewed scrutiny since the change of government.
“With AmBank, we got close on a couple of occasions to selling the asset,” says Whelan. “There is a lot of interest in the bank. But we’ve had people interested and step back [because of] the recent issues in Malaysia.”
The other is Panin Bank in Indonesia.
“Negotiations are underway with counterparties on both,” Whelan says.
One wonders, though, if their sale is still the priority it once was. Though clearly non-core, these banks and their markets are now performing much better than Australian banking, which has been blighted by a royal commission and shrinking margins.
AMMB Holdings (the listed name of AmBank) recorded a 5.9% year-on-year increase in first-quarter net profits; Panin Bank logged 22% net profit growth in the first half. Meanwhile ANZ just cut its forecasts and expects a A$697 million ($495 million) hit to after-tax annual profit from various costs such as customer compensation and legal fees from the royal commission.
Whelan says he still expects to sell both assets.
“But we’re not going to rush it. They’re both performing well, and it’s not a fire sale.”