Update: Australia's ANZ unveils US$2.2b share sale; more fundraising seen

[SYDNEY] Australia and New Zealand Banking Group said it will raise A$3 billion (S$3 billion) in a share sale to meet tougher capital ratio rules - a smaller-than-expected offering that analysts believe only marks the start of further fundraising efforts.

Australia's big banks have one year to raise a combined US$7 billion after a domestic regulator last month asked for a bigger cash buffer against mortgages to make them "unquestionably strong". ANZ's sale follows a A$5.5 billion rights issue from National Australia Bank and A$1.25 billion perpetual hybrid offering from Westpac.

ANZ, Australia's No. 3 lender by market value, has the weakest capital ratio among major domestic banks, and analysts have predicted it will eventually need to raise a total of A$9 billion to A$10 billion to bring itself on par with international rivals. "Further capital raises are very likely in our view," UBS analyst Jonathan Mott wrote in a note to clients, saying ANZ had been slower to act to regulatory changes on capital than most global banks and needed to boost levels significantly. "We do not believe this can be achieved by asset sales or organic generation in a time frame demanded by the market," he added.

Asked about future capital plans, ANZ reiterated on Thursday that it has many options.

It is in the final stages of selling its car and equipment loan book which will help release about 20 basis points of Tier-I capital and has said it may sell minority stakes in Asian banks such as Indonesia's Bank Panin.

The share sale will consist of a fully underwritten institutional placement worth A$2.5 billion while another A$500 million will come from a share purchase plan for shareholders in Australia and New Zealand.

The shares will have a floor price of A$30.95, a discount of 5 per cent to their previous close, with the final issue price to be determined after an accelerated bookbuild on Thursday.

It aims to have a Tier-I ratio of 9.3 per cent after the offering, which compares with levels of more than 10 per cent for many global banks.

Trade in ANZ shares was halted on Thursday and is due to resume on Friday. Other banking shares fell around 2 per cent as investors sold off holdings to participate in ANZ's share placement, traders said.

ANZ also reported cash profit rose 4.3 per cent to A$5.4 billion for the nine months ended June 30. Provisions for non-performing loans jumped 13 per cent to A$877 million.

The share placement was underwritten by Citigroup, Deutsche Bank and JPMorgan.

REUTERS