Australia's Westpac shrinks Asian footprint

[SYDNEY] Australia's Westpac Banking Corp on Tuesday said it would reduce its Asian lending footprint as a result of challenging market conditions and slowing corporate activity that have placed downward pressure on returns.

Westpac said in a statement it would "simplify processes and remove duplication" at its institutional division in Asia, where Australian banks have faced increasing competition from rivals with lower costs of capital.

Australia's second-biggest bank added it would stop offering new mortgages over property in Australia and New Zealand to Singapore and Hong Kong customers, including expats, a business that had represented a very small portion of its overall mortgage book.

In recent weeks, rivals Australia and New Zealand Banking Group (ANZ) and Macquarie Group have also pointed to tough conditions in Asia relative to their higher-returning home market.

"The market environment remains challenging for international banks globally and in Asia," a Westpac spokeswoman said.

"Generally lower levels of corporate business activity have led to reduced volumes and put downward pressure on returns."

She declined to comment on the number of job losses associated with the changes.

Asia-Pacific lending slumped to its lowest levels in four years at the start of 2016, as activity stalled amid global market volatility and China's economic slowdown.

Westpac's move follows a bigger retreat by ANZ, which last month sold its retail and wealth arms in five Asian countries after failing to build up enough scale to boost returns to an acceptable level. ANZ has also cut the size of its institutional loan book in the region.

Australia's biggest investment bank, Macquarie, last month said conditions in its Asian equities business were tough due to a reduction in risk appetite and said there was no sign the situation would improve this year.

REUTERS