New CEO Shayne Elliott told a business conference in Melbourne that the lender needs to “tighten” its Asia business that it has developed over the years, as a result of which the business might end up being smaller.
ANZ, which has the most focus on Asia among Australia’s major lenders, is reviewing its business in the region in the face of an economic slowdown there and has exited what it dubs its “emerging corporate” business in Singapore, Vietnam, Hong Kong, Indonesia and Taiwan.
“For Asia…we’re at that point in maturity where we’ve built this great thing and now it’s just time for us to tighten it up. It may result that at the end of the tightening up, Asia is a bit smaller than it is today but that’s not the objective.”
“What you build has to be of value for your customers. That means they have to be prepared to pay for it and want to use it. Otherwise, what’s the point?”
Other mid-sized lenders such as ING, RBS and Societe Generale have scaled back operations in Asia after failing to reach critical mass.
Since taking the helm this year, Elliott has rejigged key leadership teams and has said ANZ would shift focus to areas where growth is faster and returns are attractive.
Elliott’s predecessor Mike Smith kick-started the bank’s “super-regional” strategy in 2007, but investors have not embraced that strategy due to concerns Asia is distracting from the more profitable Australian home-lending business.
ANZ’s plans to sell its 39% stake in Indonesia’s Bank Panin is “not so active” at the moment, Elliott said on Tuesday, confirming a Reuters report that the sale has hit a roadblock after the death of a key member of the family that owns the biggest stake in the Indonesian lender.
Partnerships with other banks “are no longer as strategically important as they used to be,” Elliott added.
It was not clear when ANZ, which needs to free up capital to boost its finances, would be able to revive the sale process. ANZ’s stake is worth an estimated $450 million.
ANZ shares traded down 1.3% at A$25.54 on Tuesday, in line with the weakness in other banking shares.
They are down 8.5% since the start of this year, underperforming a 2.4% drop in the benchmark index.