MELBOURNE • Australia & New Zealand Banking Corp (ANZ) agreed to sell its 20 per cent stake in Shanghai Rural Commercial Bank for A$1.84 billion (S$1.92 billion), in chief executive Shayne Elliott's latest move to unwind an Asian expansion that sapped profits.
China Cosco Shipping and Shanghai Sino-Poland Enterprise Management Development will buy 10 per cent each, the company said yesterday. The holding was valued at A$2 billion in ANZ's 2015 annual report.
"The sale reflects our strategy to simplify our business and improve capital efficiency," ANZ deputy CEO Graham Hodges said, adding that the deal would allow the bank to focus resources on its Asian institutional business. The sale will increase ANZ's Tier 1 capital ratio by about 40 basis points, the bank said.
ANZ shares closed up 1.7 per cent in Sydney, outperforming a 1.2 per cent gain in the S&P/ASX 200 financial index. The lender's shares gained 8.9 per cent last year.
"It is a strategic deal and a good outcome for ANZ," Sydney-based banking analyst at Bell Potter Securities T. S. Lim said by phone, noting that some investors had seen the risk of a fire sale at a bigger discount.
For Cosco Shipping, the acquisition is another step in expanding its financial businesses. Last month, it agreed to buy HK$6.15 billion (S$1.15 billion) of shares in a Chinese asset manager.
In February last year, chairman Xu Lirong said that Cosco Shipping planned to apply for more financial licences and to increase its investment in insurance and brokerage businesses, the 21st Century Business Herald reported.
Since taking over as head of ANZ in January last year, Mr Elliott has sought to wind back the bank's lower-returning businesses in Asia.
Last October, he announced the sale of retail and wealth-management businesses in five Asian markets to DBS Group Holdings. Also on the block are stakes in China's Bank of Tianjin, Bank Pan Indonesia and Malaysia's AMMB Holdings.
Domestically, ANZ is also exploring options around the sale of its Australian wealth and New Zealand insurance businesses. The Shanghai Rural deal is expected to close in the middle of this year, subject to regulatory approvals, ANZ said.
Under previous CEO Mike Smith, ANZ had more than doubled its number of corporate clients and almost tripled its number of employees in Asia to 21,000. The bank had set a target to earn as much as 30 per cent of profits from outside Australia and New Zealand by this year.
However, the strategy struggled to deliver as near-zero interest rates pushed on margins and new banking regulations required capital deductions for minority shareholdings in other financial firms.
ANZ first invested in Shanghai Rural in 2006, during Mr John McFarlane's tenure as CEO. No comment was immediately available from China Cosco Shipping or Sino-Poland.