ANZ, ING step into the big league

By KEVIN TAYLOR and AGENCIES

ANZ and ING Group are starting a funds management and life insurance joint venture, which will rocket up the funds management rankings in Australia and New Zealand.

The joint venture will have $46 billion under management and administration, mostly in Australia.

ANZ chief executive John McFarlane said that in one move the venture "takes us into the big league" in funds management in both countries.

ANZ is Australia's fourth-largest bank and Dutch financial services company ING is one of the world's largest investment, banking and insurance groups.

The joint venture starts at the beginning of next month.

It includes ING and ANZ operations in New Zealand, where ING (formerly Armstrong Jones) is already the third or fourth-largest manager of retail and wholesale funds.

The two groups said yesterday that the combined entity, to be called ING Australia, would hold a "top four" position in retail funds management in Australia and would be in the leading position in New Zealand.

The deal involves ING taking a 51 per cent stake and ANZ taking a 49 per cent share. ANZ will make a capital contribution of $1.16 billion, funded internally.

ING Australia will combine ING's retail fund management and life insurance businesses and most of its distribution in Australia and New Zealand with ANZ's life insurance and fund businesses.

The agreement with ANZ is in line with ING's strategy in other countries to pair with a local bank and gain access to branches to sell life insurance and pension products.

Investment research company FundSource said the combined ANZ and ING operation put it in the top 10 in retail and wholesale funds managers in Australia.

Apart, the two did not make the top rankings, said the company's executive chairman David van Schaardenburg.

He said the deal was driven by merger and acquisition activity in Australia where the big four banks - ANZ, Westpac, National Australia Bank and Commonwealth Bank of Australia - were barred from merging with each other or Axa or AMP, and had sought other ways to grow.

That had been by merging or buying a funds management business, and the ANZ and ING deal was the latest example.

"People in the funds management industry tend to mergers or acquisitions when they can't achieve organic growth," said van Schaardenburg.

ING was the third or fourth largest retail and wholesale funds manager in New Zealand, but was well down the rankings in Australia, he said.

McFarlane said of the joint venture: "We create a sustainable top tier position in wealth management and protection products, access to global investment capability and strengthen our ability to serve customers in the fast growing funds management and life insurance sectors in Australia and New Zealand."

John Wylie, chief executive of the joint venture, said the business would immediately offer scale, capability and distribution channels to grow strongly and shape the future of the industry in coming years.

The deal will not include ING's Australian general insurance interests, ING Investment Management, ING Real Estate, and ING's wholesale, investment banking and retail banking operations, including ING Direct.

It also does not involve ANZ's distribution businesses and financial planners, nor ANZ Trustees and Lenders Mortgage Insurance.