ANZ Bank is selling its 20 per cent stake in Shanghai Rural Commercial Bank for A$1.84bn (US$1.33bn) to two Chinese state-owned enterprises, marking the latest phase of the Australian lender’s retreat from retail banking operations across Asia.
ANZ said on Tuesday that China Cosco Shipping Corp and Shanghai Sino-Poland Enterprise Management Development Corp had each agreed to acquire 10 per cent of SRCB. The sale will increase ANZ’s tier one capital ratio by about 40 basis points, the bank added.
“The sale reflects our strategy to simplify our business and improve capital efficiency,” said Graham Hodges, ANZ’s deputy chief executive, in a statement. “The sale will also allow us to focus our resources on our institutional banking business in Asia.”
Shares in ANZ were up 1.7 per cent at A$30.94 by early afternoon in Sydney, in a broader market that was up 1.2 per cent.
ANZ’s stake sell-off follows a series of similar sales by rivals, the most recent being Citigroup’s $3bn stake in Guangfa Bank in March.
A decade ago, taking a sizeable minority stake in a Chinese bank was viewed as a means of getting closer to the mainland financial market while also sealing important political connections. But the strategy has shown limited results, and foreign banks’ share in China’s banking industry has hovered around 2 per cent.
UBS was the first to sell off its holding in a Chinese bank, selling its 3.4bn shares in Bank of China for $835m in 2009. In 2013, Goldman Sachs sold about $1bn worth of shares in Industrial and Commercial Bank of China. Later that year, Bank of America sold its remaining shares in China Construction Bank for $1.47bn.
HSBC retains the 20 per cent of Bank of Communications that it bought for $1.7bn in 2004, in what was the first foreign investment in a Chinese bank.
The ANZ sale marks the Australian bank’s second disposal of Asian holdings over the past three months as Shayne Elliott, chief executive of the Melbourne-based lender, unpicks the “super-regional” Asia strategy that was pursued by his predecessor Mike Smith.
ANZ is also seeking to sell its 39 per cent stake in Indonesia’s Panin Bank, its 24 per cent holding in Malaysia’s Ambank, its remaining 12 per cent stake in Bank of Tianjin and its Philippines credit card joint venture with Metrobank.
A 12-month lock-up period on the sale of ANZ’s shares in Bank of Tianjin expires in March, which has prompted speculation this will be the Australian bank’s next Asian sale.
Mr Elliott has said ANZ’s retail banking and wealth management operations in Asia lacked scale and increased regulatory costs in the wake of the financial crisis. New regulations require lenders to make capital deductions for minority shareholdings in other financial companies.
ANZ valued its stake in SRCB at A$1.99bn at the end of September. The bank said the sale price was broadly in line with the carrying value of the investment and that the deal was expected to close by mid-2017.
In October ANZ sold its wealth and retail operations in Hong Kong, Singapore, Taiwan and Indonesia to Singapore-based DBS.
ANZ has also signalled that it may sell parts of its Australian wealth management business, after a strategic review led it to conclude that it “does not need to be a manufacturer of Life and Investment products”.
State-owned China Cosco Shipping has amassed stakes in several Chinese banks and financial companies. In December the shipping group’s investment arm bought shares in China Cinda Asset Management, an asset manager. A year earlier it acquired a 13.6 per cent stake in China Bohai Bank from China Ocean Shipping for Rmb5.5m ($791,000).
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