ANZ bank to sell Shanghai Rural stake for A$1.84b

[SYDNEY] Australia & New Zealand Banking Corp sold its 20 per cent stake in Shanghai Rural Commercial Bank for A$1.84 billion (S$1.91 billion), Chief Executive Officer Shayne Elliott's latest move to reduce the lender's retail presence in Asia.

China Cosco Shipping Corp and Shanghai Sino-Poland Enterprise Management Development Corp will each buy a 10 per cent stake in the Chinese bank, the Melbourne-based company said in a statement Tuesday. The stake was valued at A$2 billion in ANZ's 2015 annual report.

"The sale reflects our strategy to simplify our business and improve capital efficiency," ANZ Deputy CEO Graham Hodges said in the statement, adding it would allow the bank to focus resources on its Asian institutional business. The sale will increase ANZ's tier one capital ratio by about 40 basis points, the bank said.

Since taking over in Jan 2016, Mr Elliott has sought to wind back the bank's lower-returning businesses in Asia, a legacy of predecessor Mike Smith's expansion into the region.

In October, he announced the sale of ANZ's retail and wealth-management businesses in five Asian markets to Singapore's DBS Group Holdings Ltd and signalled more divestments were to come.

Also on the block are stakes in Bank of Tianjin Co, PT Bank Pan Indonesia and Malaysia's AMMB Holdings Bhd.

ANZ shares rose 1.3 per cent to A$30.81 at 10:23am in Sydney. The stock gained 8.9 per cent last year.

Asian Expansion Under Smith, ANZ had more than doubled the number of corporate clients and almost tripled the number of employees in Asia to 21,000. The bank had set a target to earn as much as 30 per cent of profits from outside Australia and New Zealand by 2017.

However, the strategy struggled to deliver anticipated returns as near-zero interest rates pushed on margins and new banking regulations required capital deductions for minority shareholdings in other financial firms.

ANZ first invested in Shanghai Rural, which was formed out of a group of local credit co-operatives that was approved for a banking license, in 2006. The Chinese bank has more than 300 outlets and employs more than 5,000 staff, according to its website.

BLOOMBERG