The Telegraph
Since 1st March, 1999
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ANZ gains control of New Zealand bank

Wellington, Oct. 24 (AFP): Australia’s ANZ bank said Friday it would buy the National Bank of New Zealand for 5.71 billion NZ dollars ($3.4 billion) from Britain’s Lloyds TSB to create New Zealand’s biggest banking group.

The move announced by ANZ officials here gives Australia near complete control of New Zealand’s banking industry, owning the top five banks: the ANZ and the National Bank, as well as the Bank of New Zealand, ASB Bank and Westpac.

Melbourne-based ANZ said it would raise 3.6 billion Australian dollars ($2.5 billion) in a rights issue to fund the purchase.

The central Reserve Bank said it had consented to the purchase on the condition that the ANZ and the National Bank operations retained their separate identities. Any change would require a new approval.

There was market speculation that ANZ would seek to eventually dump its own identity — which regularly scores poorly in consumer surveys in New Zealand — and trade instead under the National Bank logo which jostles for the top position in customer satisfaction.

ANZ said it would work together with National “to complete a very different acquisition — one based on customer satisfaction and growth by retaining the best of both banks”.

It said material change was expected to the total number of about 300 branches the ANZ and National Bank have in New Zealand.

ANZ group chief executive John McFarlane said the takeover would create the leading bank in New Zealand and one of New Zealand’s leading companies.

“The acquisition is not reliant on cost savings from branch closures and no financial benefit from this has been assumed...,” he said. “It means running our business in New Zealand more like a partnership with The National Bank and minimising change for customers.”

The fate of the National Bank, established in 1872, has been up in the air since earlier this year when Lloyds let it be known it was interested in offloading it for around $7 billion.

National is New Zealand’s second largest bank, with assets of about $40 billion and a profit last year of $503 million. It has around 35 to 40 per cent of New Zealand’s rural lending.

Lloyds, which became Britain’s biggest provider of consumer financial services by acquiring Scottish Widows Fund and Life Assurance Society last year, needs to make more purchases to ensure growth and catch rivals such as Barclays Plc. The purchase price was nearly $800 million less than analysts had expected. It is 11.2 times National’s adjusted June year net profit.

Other likely purchasers such as Westpac, HSBC and Commonwealth Bank of Australia earlier pulled out of the race, hinting the asking price was too high.

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