ANZ Bank Likely to Buy RBS Assets

Submitted by Jim Thesiger on 3 August, 2009 - 06:31

Although RBS group’s businesses in Asia made a loss last year, ANZ Banking Group (ANZ) is expected to move forward with its plans to buy Royal Bank of Scotland’s assets in this region. The half year result of RBS corresponds with the ANZ Bank’s regional plans as far as the purchase of operations in Taiwan, Indonesia, Hong Kong, Singapore, The Philippines and Vietnam are concerned.

The assets of Royal Bank of Scotland at Malaysia, China and India which are expected to be bought by Standard Charter recorded a loss of $98 million on the year 2008. According to the research note of JPMorgan, increasing loan impairments, inefficiencies due to lack of scale and group cost obligations lead to their downgrading. However, according to expert Scott Manning, this is something that accentuates their potentials to ANZ Bank that has the scope of expanding its footprint by attaching the business with its current assets. It might also gain from adding up modest volumes to which was established Hong Kong and Singapore.

According to Mike Smith, the chief executive of ANZ Bank, its current approach in Asia will generate about 20% of $8 Billion in group profit by the year 2012. According to Mr. Manning, Out of $35 billion of its shareholder funds, around $5.5 billion were already allocated in this region. He broke the anticipated price into three sectors including $400 million for purchasing the RBS assets, $350 million for deposits and $150 million for wealth management income.

Mr. Manning stated that it is important to give more focus on China and India in order to successfully accomplish ANZ’s mission as far as the super regional strategy is concerned. He also said that the main driver of the strategy was ANZ institutional business which is accounted for 77 percent assets, 60 percent revenues and 67 percent of profit. It is to be mentioned that the business stream of ANZ including wealth management, institutional and retail had a level of customer deposits which was in surplus of assets and helped the operations to remain self-funded.