ANZ Bank to buy ING JV in Australia For €1.1B
Australia and New Zealand Banking Group has agreed to buy ING Groep NV's 51% stake in their life insurance and wealth management joint venture in Australia and New Zealand for EUR1.1 billion in cash.
The deal, which is likely to close by the end of the fourth quarter, makes good on ANZ Bank's ambitions to boost its exposure to the wealth management sector, where it has been underweight compared to many of its peers.
It also continues a recent run of acquisitions by Australia's biggest banks as they lock in market share while rivals flounder amid still tough conditions in the sector globally.
ANZ Bank, which currently owns 49% of the ING venture, had been sitting on around A$4 billion in cash following a recent capital raising. It also recently agreed to buy some of RBS's commercial and retail banking operations in Asia for US$550 million.
"ANZ has been able to take advantage of the global financial crisis and ANZ's strong balance sheet to advance our strategy," ANZ Chief Executive Mike Smith said.
"(The ING deal) also gives us the flexibility to pursue further growth opportunities over the medium term without the constraints of a joint venture structure and supported by a well capitalised parent company," Smith said.
"The value proposition is also compelling with an attractive purchase price combined with significant revenue opportunities and selected cost synergies," he said.
ANZ said it expects the deal, which still requires reguatory approval, to boost its earnings per share in the 2010 financial year.
"This transaction also reinforces that ANZ's super regional objective is not just an Asian strategy - it's a regional strategy founded on strong positions in our Australian, New Zealand and Asia Pacific markets," Smith said.
Johan Vanderlugt, an analyst at Daiwa, said: "We applaud the deal for its strategic fit and the ROE upside coming from the very profitable and stable Australian wealth management business."
Australia's other major banks have also been building out their financial services business.
National Australia Bank Ltd. (NAB) in June agreed to buy some of Aviva PLC's (AV.LN) Australian business for A$825 million and in August said it would take a majority stake in Goldman Sachs JBWere's private wealth management business in Australia and New Zealand for A$99 million.
ING Group said in a statement it expects a profit of around EUR 300 million from the sale, which will improve its debt to equity ratio. It will also free up an estimated EUR900 million of capital for the group, which is targeting further divestments in Asia.
"This transaction is another important step in executing our Back to Basics strategy," ING Chief Executive Jan Hommen said.
"The sale of our insurance and wealth management operations in Australia and New Zealand is further proof of our determination to simplify the organisation by focusing on fewer, strong franchises that form a coherent group," he said.
"This shows once more that our continued transformation is well on track."
ING said it will retain its ING Direct, ING Investment Management, ING Wholesale Banking and ING Real Estate operations in Australia.
An ANZ spokeswoman declined immediate comment on ING's statement. ANZ shares have been put in a trading halt ahead of the announcement of the deal.
-By Lyndal McFarland, Dow Jones Newswires; 61-3-9292-2093; lyndal.mcfarland@dowjones.com
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