ANZ to take $265m hit on Asia wealth sale

ANZ will take a $265m hit after offloading its retail and wealth business in five Asian markets to Singapore’s DBS Bank.

ANZ has been reviewing its Asian wealth assets.

ANZ will take another $265 million hit after offloading its retail and wealth business across five Asian markets to Singapore’s DBS Bank, stepping up the group’s pull back from the region in favour of Australia and New Zealand.

Unwinding the $550 million acquisition of assets from Royal Bank of Scotland in 2009, ANZ (ANZ) today unveiled the sale of retail and wealth business in Singapore, Hong Kong, China, Taiwan and Indonesia as part of a strategy to focus on institutional banking in Asia.

“Asia remains core to ANZ’s strategy,” said chief Shayne Elliott, who replaced Mike Smith in January.

“This transaction simplifies our business while allowing us to continue to benefit from higher levels of growth in the region through a focus on our largest, most successful business in Asia — banking large corporate and institutional clients driven by trade and capital flows particularly with Australia and New Zealand.”

ANZ said the sale price represented an “estimated premium” to the business’s book value of

around $110m.

But the bank will wear a net loss of $265m including writedowns of software, goodwill and fixed assets, and separation and transaction costs.

In late morning trade, ANZ shares were down 0.8 per cent at $27.39 in a flat broader market.

The charges — which come ahead of ANZ’s annual results on Thursday — add to $360m of “specified items” announced on Friday relating to job cuts and provisions to shield from potential losses in the bank’s derivatives book.

ANZ last month also unveiled a $145m provision after reaching a commercial settlement with former ­clients Pankaj and Radhika Oswal who had launched a $2.5 billion claim against the bank.

Macquarie analysts today told clients “one-offs are becoming a habit” for ANZ.

The sale of the Asian retail operations follows the recent appointment of investment banker Michelle Jablko as chief financial officer to help oversee a range of asset disposals, including ANZ’s handful of minority investments in some Asian banks.

Since becoming chief, Mr Elliott has also been running off low-returning loans in ANZ’s institutional division as he strives to generate stronger returns.

The retail and wealth business being sold includes $11 billion in loans, $7bn in credit risk weighted assets and $17bn in deposits. In the last financial year, the business made about $825 million in revenue and $50m in net profit.

The asset sale will increase ANZ’s closely watched common equity tier one capital ratio by 15-20 basis points.

However, there will be a “small impact” on the bank’s return on equity and earnings per share.