ANZ plans to regrow institutional client base and sees ‘young hungry’ minds in Singapore

ANZ plans grow its book of corporate clients again after it culled almost four in five large customers and made a very public retreat from the Asian strategy of its former boss.

ANZ head of institutional banking Mark Whelan. Picture: Stuart McEvoy

ANZ wants to selectively regrow its book of large corporate clients, after culling almost four out of five large customers over the past seven years, institutional boss Mark Whelan says.

Following a very public retreat from the Asian strategy pursued by its former boss, Mike Smith, since 2016, ANZ’s institutional bank is on the rise.

Its focus on multinational payments and transaction banking services for a more select cohort of large companies with regional trading and investment needs has helped the unit’s returns to double since 2016. Speaking to The Australian from Singapore on Tuesday, Mr Whelan said the bank wanted to keep reducing the unit’s proportion of lending in favour of offering more lucrative services such as cash management and access to financial markets.

“By 2030 I would like to see 40 per cent of revenues coming from payments and cash management, 30 to 35 per cent from financial markets, and the balance from debt,” Mr Whelan said.

The current revenue split was about a third from each category. Lending revenue accounting for about 45 per cent back in 2016.

Former ANZ chief Mike Smith’s strategy has been unwound. Picture: Nikki Short

Lending requires a much higher capital requirement, making it harder to achieve top returns. And Mr Whelan also said the bank would not skimp on maintaining the quality of its payment systems to ensure customers kept trusting it, and would continue spending on technology.

“We want to grow the loans business. We just want to grow the markets and the cash business faster,” he said.

The slowdown in lending for now aligns with the prevalent caution among companies, given higher inflation and lower demand for credit. Loan business volumes in Asia are down 30 per cent this year.

“There’s a lot of desire from corporates to grow. They’ve just been cautious at this point,” Mr Whelan said.

“When that turns, there will be quite a significant investment. The question is when, and I expect that will be when inflation is under control and a terminal (cash) rate is reached in the US.”

Ahead of the annual finance and treasury forum on Thursday, the head of the unit in Southeast Asia, Mark Evans, said the region was key to “managing” the bank’s talent.

“Talent across the finance industry is a real challenge,” said Mr Evans, who leads a team of 800 people as ANZ’s Singapore country head, and oversees the institutional bank in Southeast Asia, India and the Middle East.

“Singapore is a great location for us, closely linked to a very fast growing region with lots of young hungry minds that we can either bring into the bank, learn from and then deploy across our footprint in 29 different countries.”

Singapore is ANZ’s largest operational business presence outside Australia and New Zealand, excluding its “capability” centre in Bangalore, where 8000 staff support the bank’s operations.

The country would also be a destination to train its Australia and New Zealand bank staff in the institutional banking division, he said.

ANZ has achieved a drastic improvement in the performance of the unit by streamlining its network and cutting lower-quality customers.

ANZ wants to selectively regrow its book of large corporate clients. Picture: David Geraghty

The bank now focuses on about 6300 clients across its institutional division, which contributed close to a third of the group’s profit last financial year.

“That is down 27,000 back in 2016. We had spread ourselves far too thin (and) were doing business with customers who didn’t really value the services that we provided,” Mr Whelan said.

Saying goodbye to those customers while improving the level of service to “really important customers” resulted in productivity benefits and lower ­expenses.

“That means our returns basically doubled over that period because of that focus,” he added.

ANZ now has a 14 per cent return on equity in its institutional bank, up from 7 per cent in 2016.

“One of the reasons I’m here … is that we want to start growing our customer base again,” he said. “They have to fit this criteria which is a link to Australia or New Zealand … and customers that want to be able to see us in multiple jurisdictions.”

The bank operates in 29 markets, including 14 in Asia, and sees its streamlined international network as a strategic asset that rivals cannot match.

Some of its largest customers for payment and cash management services include international banks, pension funds, and other financial institutions.