ANZ considering sale of stake in Malaysia's AmBank: sources

Sydney

ANZ Banking Group is weighing the sale of its 24 per cent stake in Malaysian lender AMMB Holdings Bhd (AmBank) and is also seeking to reduce its 20 per cent stake in China's Shanghai Rural Commercial Bank as the Australian bank steps up efforts to exit minority stakes in Asia, people familiar with the matter said.

ANZ's stake in Malaysia's sixth-biggest lender is valued at about US$820 million and its holding in the Chinese bank is valued at almost US$1.5 billion.

ANZ CEO Shayne Elliott, who took over at the beginning of this year, is turning his focus back on the bank's core home market, reversing past efforts to build a pan-Asian footprint.

ANZ and AmBank declined to comment. Shanghai Rural Commercial could not be immediately reached for comment.

The sources declined to be identified as negotiations were confidential.

Goldman Sachs is advising ANZ on the sale of a stake in the Chinese lender while there was no formal sale process yet for AmBank, the sources said.

A spokeswoman for Goldman Sachs declined to comment.

For banks, holding minority stakes in another lender is proving to be expensive under new rules that require them to set aside equity capital against such investments. The rules were less onerous when ANZ picked up these stakes before the global financial crisis.

The Malaysian sale by ANZ is also partly due to AmBank's involvement in a political scandal linked to state fund 1Malaysia Development Berhad (1MDB) and Prime Minister Najib Razak, three sources said.

Mr Najib has been buffeted for months by allegations of graft and financial mismanagement at debt-burdened 1MDB and in particular by revelations of the transfer of hundreds of millions of dollars into his AmBank accounts in 2013.

Mr Najib has denied any wrongdoing and said that he did not take any money for personal gain.

Late last year AmBank was slapped with a RM53.7 million (S$19 million) fine by the Malaysian central bank for breach of certain financial regulations. "They have held discussions about this, but this is not an easy situation," said a person familiar with the talks.

Earlier this week, ANZ's deputy chief executive Graham Hodges was questioned by politicians during a senate inquiry over its role as a shareholder of AmBank.

Mr Hodges defended ANZ representatives who sat on AmBank's board at the time. "We don't control that bank," Mr Hodges told the inquiry.

He said he was "certainly not" happy with the situation "but that's different to implying that the culture or the integrity of one of the people who sat on the board is less than it should be because they've sat on the board."

While ANZ has held talks with investment banks about a possible exit strategy, finding a buyer quickly would be tough due to Malaysia's difficult political and economic situation, the sources noted.

"Who is going to step into their shoes and deal with the regulatory investigations," asked a senior South-east Asia banker who is aware of ANZ's plan to exit.

He said it was easier for ANZ to do something three to six months ago, but it has now become difficult due to the mounting controversy.

Another source said that Chinese and Taiwanese buyers are likely to be interested in buying the ANZ stake in the Malaysian bank, without declining to name specific banks. Reuters