ANZ to sell 20% stake in Shanghai Rural Commercial Bank Co for A$1.8 bn
03 January 2017
Australia and New Zealand Banking Group Ltd today announced plans to sell its 20 per cent stake in Shanghai Rural Commercial Bank Co Ltd for A$1.8 billion ($1.3 billion), as part of its broader sell-down of Asian assets.
The purchasers in deal are China COSCO Shipping Corp and Shanghai Sino-Poland Enterprise Management Development Corp. The deal represents a price-to-book ratio of about 1.1 times Shanghai Rural's net assets as of December 2015.
The move formed part of ANZ's initiative to cut its Asian exposure, which included the sale of wealth and retail businesses in Singapore, Hong Kong, China, Taiwan and Indonesia to DBS Group.
For banks, that holding stakes in lenders like Shanghai Rural, it was proving expensive under new rules that required them to set aside equity capital against such investments.
The lender, which had invested a total of A$568 million to acquire the stake in 2007, had since then faced investor pressure to exit minority stakes in Asia and to boost its Tier-I capital ratio, the core measure of a bank's financial strength.
According to ANZ, the sale would boost its tier-I capital ratio by about 40 basis points. The lender added that its ratio was 9.6 per cent in its annual report in November.
''As we have previously stated, the sale reflects our strategy to simplify our business and improve capital efficiency," noted the bank's deputy chief executive, Graham Hodges, in a statement.
"This includes a significant commitment to China over the past 30 years with 100 per cent ANZ-owned branches in Beijing, Shanghai, Guangzhou, Chongqing, Chengdu, Hangzhou and Qingdao serving our institutional clients."
Investors had given the thumbs up to the deal, with ANZ shares rising 1.8 per cent to $30.96 by 3:19 pm Australian Eastern Daylight Time (AEDT) on a day when the broader market was up 1.2 per cent.