ANZ tries to hose down urgency around the sale of its stakes in Asia

ANZ Bank has moved to quell the urgency around it selling stakes in various Asian lenders to support the group’s capital position.

Andrew Geczy of ANZ.

ANZ Bank has moved to quell the urgency around it selling stakes in various Asian lenders to support the group’s capital position and brushed off analysts’ scepticism of its newly released target for returns from institutional banking.

“We’re not in a rush on anything. It’s not like I’m getting all this pressure to sell my partnership stakes,” Andrew Geczy, head of the bank’s international and institutional banking unit, told The Australian on the sidelines of the bank’s investor tour in Hong Kong.

IIB is the bank’s second- largest unit after Australia and is driving the group’s super regional strategy to increase earnings from the Asia-Pacific, Europe and America to 25 per cent to 30 per cent of the group by 2017, up from 20 per cent.

Helping the pursuit, ANZ has “partnerships” — or equity stakes — in various banks from China to The Philippines with a carrying value of $4.1 billion at September 30.

But the holdings are detrimental as the stricter Basel III global rules force ANZ to deduct the entire value from its tier-one capital, a metric being watched closely by investors.

Several analysts believe ANZ will sell some of the stakes because of pressure on its capital ratio, which fell in the first half.

Mr Geczy, hosting his first Asia investor tour after taking over the role last year, said that while some partnerships were “strategic”, such as its 40 per cent of The Philippines’ Metrobank Card Corporation, ANZ could increase its ownership positions or sell them.

“Cambodia would be a great example. If we get the right price to sell it, we’d probably sell it. If we get the right price to buy it, we’ll buy it,” he said.

“Investing in partnerships is a great way to help you build businesses. To understand the ­market.”

Despite the region’s surging growth, ANZ’s Asian super regional strategy has divided the market because of the lower immediate returns than in Australia.

To appease analysts, Mr Geczy this week revealed his institutional business — to which Asia contributes 36 per cent of profits — would generate a “through-the-cycle” ­return on equity of 13 per cent, above its cost of capital.

But with the group targeting an ROE of 16 per cent by 2016, analysts labelled the 13 per cent target as “modest”. Macquarie analyst Mike Wiblin questioned if the bank’s optimism on Asia was “a little rose-coloured” given the reform needed across the region.

Morgan Stanley’s Richard Wiles forecast ANZ would miss its ROE targets because of the “drag” from low-interest rates, competi­tion, loan losses and higher capital requirements.

But he conceded ANZ had been “more successful than we expected at building an Asian institutional franchise over the past five years”, citing the more than doubling in corporate ­customers.

Mr Geczy said some analysts struggled to understand the power of its expanded presence, referring to how it banked Jardine Matheson across several countries. “I’m looking to satisfy my shareholders,” he said, adding he wasn’t “frustrated” by analysts’ reports.

“I still think it’s lost on some of the analysts the people that can do that banking in eight countries is such a small group of people and customers reward you for delivering that for them.

“When not many people can do it, they then want to reward you sufficiently to keep banking them.”

Mr Geczy said ANZ’s Asian expansion ultimately would benefit consumers in Australia, arguing diversified earnings and funding would make it more efficient, ­allowing for lower mortgage rates.

“It’s getting people to understand the reason we have this strategy is we will be a more ­efficient, stronger bank and, by being more efficient, that means you get a better mortgage rate,” Mr Geczy said.

“It’s the why of the strategy sometimes I don’t know if we do the greatest job articulating at times.”

Michael Bennet travelled to Hong Kong courtesy of ANZ.