ANZ may sell Asia bank stakes due to stringent capital rules

ANZ would sell some of its stakes in Asian banks if Australia does not ease stringent capital requirements, said chief executive Mike Smith.

ANZ owns stakes in eight banks in the region, including 39 per cent of PT Panin Indonesia Bank, 24 per cent of AMMB in Malaysia, 20 per cent in Shanghai Rural Commercial Bank and 17.6 per cent in Bank of Tianjin in China.

Due to capital rules proposed by Australia’s banking regulator for minority stakes, ANZ’s holdings in Asian banks are expected to drag down its return on equity. ANZ has urged the regulator to ease the requirements which it says are tougher than proposed global industry standards.

Smith said if the Australian Prudential Regulation Authority does not rule in ANZ’s favour, then the bank would consider selling down its minority stakes.

“It does mean you have to look at your options,” Smith said in an interview, ahead of the bank’s third-quarter report due on Friday.

The plan raises questions about how Australia’s smallest ‘Big Four’ bank will meet the profit targets it has set for offshore operations.

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