ANZ looking to sell stakes in Malaysia, China banks

Under its new CEO, ANZ is turning its focus back to the bank's home market, reversing past efforts to build a pan-Asian footprint.
Under its new CEO, ANZ is turning its focus back to the bank's home market, reversing past efforts to build a pan-Asian footprint.PHOTO: REUTERS

SYDNEY • ANZ Banking Group is weighing the sale of its 24 per cent stake in Malaysian lender AMMB Holdings (AmBank), sources said, and is also seeking to reduce its 20 per cent stake in China's Shanghai Rural Commercial Bank as the Australian bank steps up efforts to exit minority stakes in Asia.

ANZ's stake in Malaysia's sixth- biggest lender is valued at about US$820 million (S$1.1 billion) and its holding in the Chinese bank is valued at almost US$1.5 billion.

ANZ chief executive Shayne Elliott, who took over at the beginning of this year, is turning his focus back to the bank's core home market, reversing past efforts to build a pan-Asian footprint.

ANZ and AmBank declined to comment. Shanghai Rural Commercial could not be immediately reached for comment. The sources declined to be identified as negotiations were confidential.

For banks, holding minority stakes in another lender is proving to be expensive under new rules that require them to set aside equity capital against such investments.

The Malaysian sale by ANZ is also partly due to AmBank's involvement in a political scandal linked to state fund 1Malaysia Development Berhad. Late last year, AmBank was slapped with a RM53.7 million (S$18.5 million) fine by the Malaysian central bank for breach of certain financial regulations.

Earlier this week, ANZ's deputy chief executive Graham Hodges was questioned by politicians during a Senate inquiry over its role as a shareholder of AmBank.

While ANZ has held talks with investment banks about a possible exit strategy, finding a buyer quickly would be tough due to Malaysia's difficult political and economic situation, the sources said.

"Who is going to step into their shoes and deal with the regulatory investigations," said a senior South- east Asia banker.

He said it was easier for ANZ to do something three to six months ago, but it has now become difficult due to the mounting controversy. Other sources say Chinese and Taiwanese buyers are likely to be interested.

REUTERS

A version of this article appeared in the print edition of The Straits Times on April 09, 2016, with the headline 'ANZ looking to sell stakes in Malaysia, China banks'. Print Edition | Subscribe