ANZ Prepared to Take on HSBC After RBS Asia Purchase

Australia & New Zealand Banking Group Ltd., which today agreed to buy Asian assets from Royal Bank of Scotland Group Plc, is prepared to take on Citigroup Inc. and HSBC Holdings Plc as it expands in the region.

“ANZ is going to be a regional player,” Chief Executive Officer Michael Smith, who previously ran HSBC’s Asian division, said in a Bloomberg Television interview. “I don’t want to take on HSBC or a Citigroup in Latin America or in the States or in Europe, but if it’s in our backyard, in this region, then yes, we’ll take them on.”

ANZ Bank, Australia’s fourth-biggest lender, will pay $550 million for the RBS businesses in Singapore, Taiwan, Indonesia, Hong Kong, the Philippines and Vietnam, the Melbourne-based bank said in a statement to the stock exchange. ANZ Bank shares added 3 percent to A$19.57 at the close in Sydney, the highest since June 2008, taking their rally this year to 28 percent.

RBS, based in Edinburgh, is selling or shutting businesses in two-thirds of the 54 countries in which it operates after posting the biggest loss in British corporate history last year. The acquisition will help Smith toward his aim of doubling the proportion of income from Asia to 20 percent.

“It’s a positive small step,” said Mark Nathan, who helps manage about A$4 billion ($3.4 billion) at Fortis Investment Partners in Sydney. “Australia is a limited growth market and if the banks are going to grow they are certainly going to look offshore. They’ve effectively taken over the New Zealand market and Asia is the next logical step.”

‘Stepping Stone’

ANZ Bank, which has been focused on the institutional business in Asia, is looking to broaden its commercial and consumer banking offerings in the region “where it makes sense,” Smith, 52, said.

Smith is expanding abroad after ANZ Bank’s profit fell 28 percent to A$1.42 billion in the six months ended March 31, from a year earlier, as credit impairment charges almost doubled to A$1.44 billion.

The RBS businesses represent 54 branches with $3.2 billion in loans and $7.1 billion in deposits serving about 2 million clients, ANZ Bank said in the statement. The bank, advised by Credit Suisse Group AG, is paying 1.1 times the recapitalized book value of the RBS assets, it said.

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