ANZ chief Shayne Elliott launches Asia review to dodge headwinds

New ANZ chief Shayne Elliott has launched a review of its Asian ­retail and wealth business.

ANZ is the country’s most Asia-focused bank but investors have had to withstand years of underperformance

New ANZ chief Shayne Elliott has launched a review of its Asian ­retail and wealth business as part of a range of actions to refine ­operations in the region and navigate tough conditions lashing the sector.

As ANZ unveiled a 24 per cent dive in interim profit yesterday, Mr Elliott pledged to create a ­simpler bank and review the ­recently merged retail and wealth operations in Asia in a process that would take three to six months to complete.

It comes after Mr Elliott in March put the broader wealth ­operations under review following an overhaul of the division to more closely align distribution with the retail bank. Wealth boss Joyce Phillips also exited.

The review in Asia also adds to long list of potential asset sales for ANZ, which Mr Elliott said the bank wasn’t relying on but could help the need to meet higher capital requirements and improve earnings.

It could also unwind some of the more than $500 million acquisition of retail and commercial banking assets across Asia from Royal Bank of Scotland in 2009.

In the first half, the wealth arm’s cash profit slid 1 per cent year-on-year to $261m. After losses in prior halves, the wealth business in Asia-Pacific, Europe & America made just $4m.

The Asia and Pacific retail business reported a 46 per cent slump in cash profit over the year to $53m, weighed down by higher impairments.

Asia and Pacific retail accounts for just 2 per cent of the bank’s profit, while the total wealth ­division contributes about 8 per cent of earnings.

In a note to employees, Asia ­retail and wealth executive David Hisco said much had changed in terms of regulatory and capital ­requirements since the division expanded into the region before the global financial crisis.

He added the bank had “greater clarity on what we need to ­invest across the region in technology and in products and distribution to become a truly world class retail and wealth business”.

“It’s now clear that the costs ­associated with all the above will continue to be significant if we are to sustain and grow the business,” he told staff.

ANZ is the country’s most Asia-focused bank but investors have had to withstand years of underperformance as the region, which includes 14 Asian markets, failed to deliver results comparable with the lucrative Australian mortgage market.

The regulator, APRA, has pushed banks to fund wealth arms more through equity than debt, which is dragging on their capital.

Mr Hisco said the review was “early days” and no outcome was certain for now. “Although they may differ from country to country, the review will deliver the most sensible outcomes for the bank and our customers,” he said.

The review of the Asian retail and wealth operations came as Mr Elliott provided an update on the exit of ANZ’s $5.2bn of “partnerships”, or equity stakes in a handful of Asian banks, including Malaysia’s AmBank.

He said while Bank of Tianjin’s float in Hong Kong had provided a more “more liquid situation” for ANZ to sell its roughly 12 per cent position, there had been no formal approaches for its 23.8 per cent holding in AmBank.

Mr Elliott said ANZ received “approaches on all sorts of things from all sorts of people including investment banks and others who come and have chats with us”. “But no, we haven’t been formally approached,” he said, following reports US private equity giant TPG was interested.