By Rhiannon Hoyle
SYDNEY-- Australia and New Zealand Banking Group Ltd. agreed to sell its 20% stake in Shanghai Rural Commercial Bank for 9.19 billion yuan (US$1.32 billion), marking the latest move to roll back its presence in Asia.
China Cosco Shipping Corp. and Shanghai Sino-Poland Enterprise Management Development Corp. Ltd. will each acquire 10% of the Shanghai-based bank, said ANZ, which bought its stake in 2007 as the Australian lender sought to expand its footprint in the Chinese market.
Now, under the leadership of Chief Executive Shayne Elliott, who succeeded Mike Smith as CEO a year ago, ANZ has been cooling its formerly aggressive Asia focus.
Facing the need to invest more to build up the Asia retail business, ANZ said in October that it would sell its retail and wealth-management businesses in China, Hong Kong, Indonesia, Singapore and Taiwan to Singapore's DBS Group Holdings Ltd. to focus instead on institutional banking in the region.
Mr. Elliott said at that time that ANZ was continuing to look at opportunities to exit other businesses. In addition to Shanghai Rural Commercial Bank, ANZ holds stakes in Malaysia's AMMB Holdings Bhd., PT Bank Pan Indonesia and China's Bank of Tianjin.
ANZ earlier dropped a target to get up to 30% of its earnings from its Asia-Pacific, European and Americas division by 2017.
Mr. Smith had been the chief architect of ANZ's "super-regional" strategy of expanding outside Australia and New Zealand, using his years of experience in the region to establish operations across Asia more vigorously than ANZ's rivals.
But Mr. Elliott said last year that the "environment we face has changed" and ANZ "would need to make further investments" that simply didn't make sense for the Australian bank.
Banks around the world are increasingly focused on building capital and improving returns under the pressure of sluggish revenue growth, low interest rates and rising funding costs.
Shanghai Rural Commercial Bank was established in 2005 from a group of rural credit cooperatives and has more than 300 outlets and 5,000 staff, according to its website.
ANZ said the sale price for its investment in the Chinese bank represents a price-to-book ratio of roughly 1.1 times the institution's net assets at the end of 2015. It will increase ANZ's Tier 1 capital ratio by about 40 basis points, the bank said.
The stake was valued at 1.96 billion Australian dollars (US$1.41 billion) in the Australian lender's latest annual report. ANZ shares were recently up 1.5% in Sydney.
"The sale reflects our strategy to simplify our business and improve capital efficiency," said ANZ Deputy Chief Executive Officer Graham Hodges. It "will also allow us to focus our resources on our institutional banking business in Asia," he said.
ANZ said the sale was agreed on Dec. 31 and is expected to be finalized by mid-2017.
Write to Rhiannon Hoyle at email@example.com
(END) Dow Jones Newswires
January 02, 2017 19:51 ET (00:51 GMT)
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