ANZ CEO Nuno Matos may reassess Kiwi focus during New Zealand visit

ANZ generates about 18 per cent of its revenue from New Zealand. Picture: Britta Campion

ANZ boss Nuno Matos is now days into his new job as the bank’s chief executive and despite discussion over the Portuguese executive’s aspirations for one of the country’s biggest mortgage holders, there’s been little focus on whether he takes a different approach to the New Zealand division.

Of Australia’s top four banks, ANZ has the largest market share across the Tasman, so a decision to stage a retreat from that market would cause a major upset.

But it may not be inconceivable that Matos reassesses the bank’s commitment to New Zealand. And being a foreign-born CEO, unlike other chiefs in the past running Australian banks who have been Kiwis, such as his predecessor Shayne Elliott, he would not have the same attachment.

His visit to New Zealand this week to tour operations is among his first assignments, as earlier reported by The Australian.

Yet even Elliott and his executives previously gave serious consideration to leaving the New Zealand market after he was appointed in the top job in 2016.

The catalyst was the onerous capital requirements for banks introduced by former Reserve Bank of New Zealand governor Adrian Orr, who was appointed by the Arden-led Labour government at the time.

Orr resigned this year, leaving questions about whether the rules he imposed contributed to his exit, as Finance Minister Nicola Willis expressed interest in reviewing the capital requirements for banks as part of an overall drive to encourage more foreign investment.

ANZ’s executive team previously concluded the costs of extracting the bank from New Zealand, or so called “dis-synergies”, meant it wasn’t a viable option. It has an $86bn market value and its New Zealand revenue for the half year was $2.5bn, or 18 per cent of its overall revenue of ­almost $11bn.

At such a big size, its only real option would be a demerger on to the New Zealand stock exchange.

Under the changes to its capital rules, it needed to find an additional $6bn, but managed to find ways to reduce this to about $2bn.

This is after the RBNZ in 2019 announced that its common equity tier-one requirement would be lifted to 13.5 per cent for large banks from 7 per cent. In Australia, it is 10.5 per cent.

The requirement in NZ for total capital – which includes tier one and tier two – rose to 18 per cent from 10.5 per cent.

In 2021, Westpac hired Macquarie Group to weigh a retreat from the New Zealand market, but opted to retain the division.

The view in the Australian industry at the time was that those thresholds were too high to be viable for Australia’s top four banks, and they were are said to be weighing their options with respect to New Zealand subsidiaries.

But observers at the time said the challenge for big banks exiting New Zealand was that once they left it was difficult to return, and gaining earnings growth was all about increasing market share.

Perhaps one outcome is that ANZ raises the prospect of a retreat from the New Zealand market to gain leverage in negotiations with the Chris Luxon-led National government.

Already, the government is proposing to retrospectively change laws that could see the collapse of a long-running legal action affecting more than 170,000 mortgage customers of both Commonwealth Bank and ANZ.

ANZ is New Zealand’s oldest and largest bank, with capital of $19.4bn and assets of $201bn and more than 7500 staff.

It said in its half-year result that the New Zealand division remained in a strong position amid global uncertainty.

As Matos is European and comes from HSBC – where he was based in Hong Kong – perhaps the banking boss does have offshore markets on the growth horizon for ANZ.

Perhaps he’s more focused on areas such as Asia – a part of the market where ANZ has expanded before, and then made an exit.