Australia & New Zealand Banking Group Ltd (ANZ) said Wednesday September 7 it plans to pursue a cautious regional expansion while building a stronger presence in Australia. ANZ, Australia’s third largest bank with a market value of AU$41.3 billion, is among a number of local financial services companies seeking Asian growth amid concerns about slowing economic growth and rising competition at home.
Chief executive John McFarlane told an investor briefing the bank’s priorities include increasing its presence in Australia and shoring up its dominant position in the New Zealand market.
“And lastly, expanding selectively in emerging markets in Asia Pacific, and probably not, other than in the institutional business, in the developed markets of Hong Kong, Singapore and Japan,” said McFarlane.
McFarlane said ANZ is well placed for further expansion in Asia, being the only Australian bank with experience and a tangible presence in the region.
ANZ said in June it has set aside up to AU$400 million for two new investments in China, including the planned purchase of a 20% stake in Shanghai Rural Credit Cooperatives Union.
Last month, ANZ said it is interested in buying a stake in a new Shanghai commercial bank, Shanghai Rural Commercial Bank.
Bigger rival Commonwealth Bank of Australia (CBA.AU) recently announced its second bank investment in China, a stake in Hangzhou City Commercial Bank, following its purchase last year of a stake in Jinan City Commercial Bank.
Other local companies pursuing Asian expansion strategies include Australia’s largest investment bank, Macquarie Bank Ltd (MBL.AU), and insurers Insurance Australia Group Ltd (IAG.AU), AXA Asia Pacific Holdings Ltd (AXA.AU) and QBE Insurance Group Ltd (QBE.AU).
Plans To Keep Hiring Staff
ANZ has the most extensive network in Asia among Australia’s major banks, with a presence in China, Hong Kong, Philippines, Malaysia, Taiwan, Singapore, South Korea, Japan, Vietnam, Indonesia, Thailand, India and Cambodia.
McFarlane also said ANZ would use its network in lower-cost Asian countries more aggressively by employing more staff to handle some back office operations as it tries to keep costs low.
“We make no excuses for that,” McFarlane said, adding ANZ will continue to hire more staff in Australia and New Zealand.
The outsourcing of operations such as call centres by Australian companies to lower-cost countries has raised concerns among the public and trade unions.
McFarlane said ANZ won’t move its call centres in Australia and New Zealand overseas.
ANZ recently flagged plans to increase the number of employees at its IT subsidiary in Bangalore, India, to as many as 1,000 in two-years, from 650 now.
ANZ wants to invest in rapidly growing segments as it aims to increase its revenue growth to 7-9% per annum.
“We don’t rule out acquisitions,” said McFarlane.
However, he indicated the bank will take a cautious approach as “about 80% of acquisitions fail to deliver value”.
“We want to take a much more strategic position in wealth management and insurance,” said McFarlane, adding that ANZ also wants to invest in the faster-growing investment banking side of its institutional business.
However, he isn’t eyeing expansion further a field.
“We have no plans to expand in Europe and North America,” he said.