The Melbourne, Australia-based, ANZ or Australia and New Zealand Banking Group (ASX:ANZ) has decided to scale down their Asian operations. The bank has decided to sell off their wealth management and retail banking business to the DBS Group Holdings Ltd (SGX:D05) of Singapore.
The business issued a statement on Monday morning, saying that the operations in five Asian countries – Singapore, China, Hong Kong, Indonesia, and Taiwan will now be taken over by DBS. Of course, the group has operations in other Asian markets that they are going to keep, at least for the time. ANZ is among the largest banks in Australia.
ANZ did not disclose the value of this deal. DBS did not comment as well. However, the Aussie business has revealed that they are likely to lose about A$265 million or $201 million from the sale.
This is the first time the group is pulling back from Asia. It is also an indicator that smaller players are gradually being pushed out of retail banking.
ANZ to Focus on Corporate Banking
Shayne Elliott, who is the Chief Executive of ANZ, revealed that they have 1.3 million customers in the sold businesses, but added that they were still struggling to achieve adequate scale to stay competitive in these Asian regions. “Our strategic priority is to create a simpler, better capitalized, better balanced bank focused on attractive areas where we can carve out winning positions”, he added.
To stay competitive, ANZ would have to make further investments in their branch network and digital capacities, which they were not willing to do, as the management was not confident that these measures will succeed in achieving the right scales.
For now, ANZ wants to focus on Australia and New Zealand, particularly in corporate banking, though Asia still played an important part in their overall business growth.
There was a time, however, when ANZ (ASX:ANZ) was very aggressive in Asia. The bank had purchased Asian operations in 2009 from the Royal Bank of Scotland of the UK. Their business rival, the Oversea-Chinese Banking Corp has also been making aggressive bids to improve their market presence.
DBS Strengthens Asia Operations
DBS Bank Ltd. is already big in these regions. With this acquisition, the bank will now be able to expand their wealth management business further. In recent times, they have been trying to acquire other banks, such as the investment and wealth-management operations of Barclay’s in Asia, but that deal did not go through.