Why ANZ is single (but not free) again

They said it would never last.

They were right.

ANZ and ING's weird marriage of convenience ended  last week just two years shy of its 10-year anniversary. It wasn't even a proper marriage, more like a passionless de-facto arrangement - two partners who came to each other late in life and said to each other 'you'll do'.

Under the terms of its original joint venture agreement, the 51 per cent owner ING said it would make stuff and the 49 per cent junior partner ANZ promised to sell the stuff ING made. And although the two parties muttered about 'long-term commitment' in their various communiqués at the time of the 2002 JV ceremony, they had the good sense to draw up an extensive pre- nup clause. Included in the opt-out agreement was a valuation on ING's share of the JV of about A$2.8 billion (of which A$1.8 billion was classed as 'goodwill'), far less than A$1.76 billion ANZ actually paid to buy out the partnership last week. Nonetheless, in a model corporate spin-job , Jan Hommen, head of the Dutch ING group, boasted of a EUR 300 million profit on the deal. They have great accountants. And very funny communication professionals too, who dubbed the whole exercise the "Back to Basics strategy".

Basically, ING screwed up in other outposts of its vast global empire and has been flogging off whatever it can to shore up its capital.

The price ANZ paid to take out ING was reasonable, according to industry insiders I have spoken to - despite the claims of disaffected ING 'Frozen Funds' advocates who have suggested the bank overpaid to cover up its messy mistakes.

In fact, the fate of the frozen funds would have been a minor consideration in the whole business. It just wasn't working out any more between ING and ANZ so the chequebooks had to come out.

As the joke goes: "Why is divorce so expensive? Because it's worth it."

 


David Chaplin