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ANZ to sell NZ asset finance unit to Shinsei Bank for NZ$762m
AUSTRALIA and New Zealand Banking Group on Tuesday agreed to sell its New Zealand-based asset finance unit for NZ$762 million (S$674 million) to Japanese financial institution Shinsei Bank Ltd.
Australia's fourth-largest lender, which posted a plunge in first-half profit in April, remains one of the better capitalised banks with recent divestments strengthening its coffers as it faces the impact of the coronavirus pandemic.
The sale of UDC Finance provides about A$439 million (S$422 million) of Level 2 Group CET1 capital, the lender said in a statement.
For ANZ, Level 2 as per regulatory supervision includes the capital of the group excluding associates, insurance and funds management entities, among others.
The Australian lender has been looking to sell UDC Finance for a while now after abandoning plans of spinning off the unit with a separate listing in 2018. The sale will also release NZ$2 billion of funding provided by ANZ New Zealand, further strengthening its balance sheet position.
For Shinsei Bank, it is its biggest overseas acquisition to date and marking the latest asset purchase by a Japanese company eager to move beyond a low-growth home market.
"Shinsei Bank intends to preserve UDC's operations, retain UDC employees and provide long-term capital to maintain and grow customer lending in New Zealand," ANZ Bank New Zealand CEO Antonia Watson said.
The Japanese lender said in a statement that its consolidated capital adequacy ratio is expected to decline about 0.4 percentage points once it acquires UDC Finance.
The NZ$762 million price tag is higher than the $NZ660 million that New Zealand media said China's HNA Group had agreed to pay before the deal was blocked by a New Zealand regulator in 2017.
Shinsei said small-scale finance was a focus area and UDC, which sells auto and machinery financial products, was similar to several of its domestic finance units. "Through this stock acquisition, and by leveraging its expertise in small-scale finance business, Shinsei Bank envisages further growth of UDC in New Zealand where the GDP growth rate is relatively high among the developed countries," it said in a statement.
The sale is expected to be sealed in the second half of the 2020 calendar year.
The deal value tops Shinsei's roughly 40 billion yen (S$520 million) purchase of a stake in Taiwanese bank Jih Sun Financial in 2006.
Japanese companies have been keen to tap offshore markets for growth due to thin margins and an ageing population at home.
Last year, Mitsubishi UFJ Financial Group bought an asset management business from Australia's biggest lender, Commonwealth Bank of Australia, for A$2.9 billion. In 2015, Japan Post Holdings Co bought Australian logistics company Toll Holdings for A$6.5 billion. REUTERS