The ANZ Bank has sold its 20% stake in Shanghai Rural Commercial Bank for $1.838 billion, about three times what it paid for it.
The sale is another key move in its exit from retail banking and greater emphasis on institutional customers in Asia.
CEO Shayne Elliott, who in January 2016 replaced Mike Smith, a big believer in the growth prospects of Asia, has been clear that he wants a more targeted business in the region.
He wants to concentrate on large corporate and institutional clients in Asia rather than retail business.
The bank has reached agreement to sell 10% to China COSCO Shipping Corporation Limited and 10% to Shanghai Sino-Poland Enterprise Management Development Corporation Limited.
ANZ bought into the Shanghai bank in 2007 for $568 million. Since then, ANZ has recognised $1.3 billion of equity accounted earnings and received $178 million in dividends.
In 2016, the investment contributed $259 million to ANZ’s post-tax profits.
The ANZ says its minority investments in China have helped provide it with a stronger understanding of the Chinese banking system, supporting the expansion of ANZ’s branch network and helped with the approval of a full banking licence in China in 2010.
The ANZ has 100%-owned branches in Beijing, Shanghai, Guangzhou, Chongqing, Chengdu, Hangzhou and Qingdao for institutional clients.
“This partnership has been beneficial for both ANZ and for Shanghai Rural Commercial Bank. SRCB is now a strong, successful bank with a prosperous future,” says deputy CEO Graham Hodges.
“As we have previously stated, the sale reflects our strategy to simplify our business and improve capital efficiency.
“The sale will also allow us to focus our resources on our institutional banking business in Asia.”
The sale, subject to regulatory approvals, is expected to be completed by mid-2017.
The ANZ in October announced its departure from retail banking and wealth management in Asia.
Singapore’s DBS Bank bought ANZ’s retail and wealth business in Singapore, Hong Kong, China, Taiwan and Indonesia.
The other centres where the ANZ has retail and wealth management businesses — Cambodia, Laos, Vietnam and the Philippines — are still under review.
The ANZ posted an 18% fall in 2016 full year cash profit to $5.9 billion, dragged down by the cost of reforms. The result included $1.077 billion of after tax charges, including restructuring and the cost of software.
The bank is cutting operating costs, exiting low return and non-core businesses and reducing reliance on low-returning parts of institutional banking.