Singapore is winning out over Hong Kong, ANZ bank CEO says

ANZ Group Holdings chief executive officer Shayne Elliott said that his customers moved more of their business to Singapore from Hong Kong in the past few years as the smaller Asia-Pacific trading hub narrows the gap to its larger rival.

An increasing number of clients at Elliott’s firm have chosen to invest their regional treasury capabilities in Singapore, he noted. ANZ Group now has about 800 people in Singapore, double its headcount in Hong Kong.

“There has been a migration towards Singapore, there’s no doubt about that,” he said. “That’s also true of financial institutions. The data is clear, more financial markets capability, money centre capability, Singapore has been a relative winner over that period of time.”

The two cities’ battle for capital and talent reached new heights in recent years as the pandemic restricted the movement of people, forcing many in the finance industry to reassess where they live and work. While Singapore saw an influx of highly skilled professionals and businesses escaping Hong Kong’s harsh Covid-19 lockdowns, it still has a ways to go to displace its rival as a trading hub and base for banks looking for a gateway to China.

In the Asia-Pacific region, ANZ’s focal point has been on reshaping institutional banking, where it has been focusing on larger corporate customers and operates in 29 markets. Elliott, who took the top job in 2016, wielded the axe to much of his predecessor’s Asian legacy by exiting retail and wealth-management operations in five Asian markets as well as signalling divestments of stakes in banks in Indonesia and cutting exposure in China.

“What’s happening in Hong Kong from our customers is changing,” Elliott explained. “We’d be remiss not to say that Singapore in a relative sense has outgrown Hong Kong, from our perspective. More of our customers have chosen to invest their regional treasury capabilities in Singapore. But, Hong Kong is still a very important centre for us.”

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China’s strict approach to combating Covid-19 led a flurry of bankers to exit Hong Kong, with many pitching up in Singapore and further afield in cities such as Dubai. Hong Kong lost its five-decade-long position as the world’s freest economy to Singapore, according to a recent ranking by Canadian think tank Fraser Institute, which cited more restrictive regulations and the erosion of judicial independence in the Chinese city.

National Australia Bank last month said that it would shut its Hong Kong office and consolidate operations in Singapore as well as in mainland China and Japan. It will serve customers and investors from those branches.

China’s downturn

Weakening business from mainland China, which is battling an economic slowdown and a real estate crisis, is spurring financial firms to cut jobs there. However, Singapore’s reputation has been under scrutiny with a recent multi-billion US dollar money laundering scandal that has embroiled some of the largest local and international banks.

Meantime, ANZ’s Elliott said that the lender is confident of securing approval to purchase Suncorp Group’s banking arm despite the A$4.9 billion (S$6.68 billion) transaction being blocked by Australia’s competition regulator. The watchdog noted that the deal would reduce competition and increase the chances of coordination between the country’s four major banks in the supply of home loans.

“We’re really confident about our prospects in that but time will tell if that’s successful,” he said. “We’ve got a very strong case,” adding there are very few other acquisition targets for the country’s fourth-largest lender in the domestic market, which is dominated by Westpac Banking, National Australia Bank and Commonwealth Bank of Australia.

“The short answer is no,” he noted. “I don’t really think there is anything else.”

Succession plans

Elliott, who is currently the longest-serving chief of a large Australian bank, said that his board is actively considering long-term succession planning to replace him. He declined to elaborate on the specific timing of his replacement.

“A good board always benchmarks” against external candidates, said ANZ chairman Paul O’Sullivan. “But, you know, we also are in the privileged position of having some very good internal talent, which again, is attributed to the work the management have done over time.” BLOOMBERG