The divestment was consistent with the bank’s strategy of simplifying its business and narrowing the focus of its Asian operations on institutional business, analyst David Ellis said in a research note released yesterday.
The sale followed those of five Asian retail and wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia at the end of October last year.
Mr Ellis expected ANZ’s four remaining retail and wealth businesses in the Philippines, Vietnam, Cambodia and Laos, which were under review, to eventually be sold.
Following the sale of Shanghai Rural, ANZ would have minority stakes in three Asian financial services groups in Malaysia, Indonesia and China with a combined book value of about $A3billion ($NZ3.13billion).
”We would not be surprised if these investments were also divested,” Mr Ellis said.
ANZ deputy chief executive Graham Hodges said the bank had sold its 20% share in Shanghai Rural to China Cosco Shipping and Shanghai Sino-Poland Enterprise Management Development Corporation for $A1.84billion.
ANZ had invested a total of $A568billion in Shanghai Rural. Since 2007, ANZ had recognised $A1.3 billion of equity-accounted earnings and received $A178 million in dividends.
”This partnership has been beneficial for both ANZ and for Shanghai Rural. Shanghai Rural is now a strong, successful bank with a prosperous future.”
Mr Ellis assigned a wide commercial advantage (economic moat) rating to ANZ, mainly because of its sustainable structural advantages of the Australian and New Zealand banking sectors.
The wide moat rating recognised the structural and superior competitive advantages Australia’s four banks possessed.
”The four major banks dominate a regulated and rational oligopoly, bestowing structural advantages that are strong and durable.”
New Zealander Shayne Elliot started as ANZ chief executive on January 1, 2016 and wasted no time making changes to strategy, organisational structure and the senior leadership team, Mr Ellis said.
Mr Elliot was an ”excellent choice” to lead the group through the next stage of its growth phase.