Tough new rules to hit ANZ

ANZ is set to be among the hardest hit of the local banks from tough new banking rules that threaten to weigh on the profitability of its string of Asian-based joint ventures.

Over the past decade, ANZ has built up a string of minority investments with a series Asian-based partners ranging from credit cards to stakes in two Chinese-based banks.

Under new global bank rules - known as Basel 3 - in the process of being rolled out, banks are required to set aside more capital for investments in associates or partnerships. By holding more capital against the investments, this will reduce the rates of return on equity generated by the partnership investment. Return on equity is often used by investors to measure how well management is deploying the shareholders capital.

Brokerage Deutsche Bank said new capital rules could even lead to ANZ selling its stake in some partnerships that deliver poor investment returns that have little strategic value.

ANZ has already shown it is prepared to exit an investment - offloading a 9.6 per cent stake in Vietnam's Sacombank, earlier this year.


Topics:  anz

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