ANZ eyes Asian bank assets

Australia & New Zealand Banking may buy Royal Bank of Scotland units in at least five Asian countries as Britain's biggest Government-controlled bank splits its assets in the region to attract buyers.

Melbourne-based ANZ, which operates ANZ National in New Zealand, is in advanced negotiations to acquire RBS's retail and commercial-banking units in Hong Kong, Taiwan, Singapore, Vietnam and Indonesia, said sources.

Standard Chartered is seeking RBS's businesses in China, India and Malaysia. The assets on sale may fetch about US$1.5 billion.

"ANZ is getting a nice mix," said Peter Vann at Constellation Capital Management in Sydney. "The growth in the Asian markets I think will be a positive for them. It's a nice little diversifying earner."

ANZ chief executive officer Michael Smith is expanding in Asia as swelling bad loans at home squeeze profit, prompting the bank to cut its dividend for the first time since the 1991 recession.

Smith, who previously headed HSBC Holdings Asian division, is aiming to increase the proportion of income derived from the continent to 20 per cent.

RBS is seeking to trim its operations in 36 countries that make up two-thirds of its international business after posting the biggest loss in British corporate history last year.

Chief executive Stephen Hester, who replaced Fred Goodwin after RBS sought a Government bailout, is breaking up the bank's Asian operation after potential bidders showed more interest in buying individual operations than the whole business.

ANZ disclosed its interest in RBS's Asian units on May 27 and the negotiations are continuing, said Paul Edwards, a spokesman for the bank.

ANZ sold A$2.5 billion of shares in May to fund a bid for RBS's Asian assets. The Australian bank said in January it paid A$114 million to increase its stake in Indonesia's PT Bank Panin. ANZ also said it planned to open six new offices in Vietnam.

ANZ has more investments in Asia than its Australian rivals, including a 20 per cent stake in Shanghai Rural Commercial Bank, a holding in Saigon Securities and a stake in Malaysia's AMMB Holdings.

- BLOOMBERG