Australia and New Zealand Banking Group Ltd (ANZ) and Standard Chartered Plc lined up opportunistic buys in Asia, seeking growth in a region expected to lead the world out of recession.
ANZ said on Tuesday it agreed to pay a smaller-than-expected $550 million to buy some Asian units from British lender Royal Bank of Scotland, helping it take on rivals HSBC Holdings Plc and StanChart in Asia's fast-growing markets.
StanChart, for its part, unveiled a surprise 1 billion pound ($1.7 billion) share placing to give it firepower to grasp opportunities as Asia's economies recover, just nine months after launching a 1.8 billion pounds rights issue.
The bank said it was in talks about small acquisitions in China and India, likely to cost between $100 million and $200 million. The talks involve RBS assets, a person familiar with the matter previously told Reuters.
ANZ's purchase will give it access to 54 branches across the region, with $3.2 billion in loans and $7.1 billion in deposits, taking Australia's fourth biggest bank closer to its goal of generating a fifth of its revenue from Asia by 2012.
The deal also marks the first stage of the dismantling of RBS's global empire, after its purchase of Dutch bank ABM AMRO at the height of the boom and exposure to the credit crisis prompted a bailout from the British government last year.
The deal is part of a growing trend of European financial groups exiting Asian operations as the credit crisis forces them to focus on their home markets. In June, British insurer Aviva Plc sold some of its businesses to National Australia Bank Ltd, following the sale of HBOS's Australian unit to Commonwealth Bank of Australia Ltd.
AHEAD OF THE GAME
StanChart outlined its M&A plans as it reported a 10 percent rise in first-half profit.
It's about staying ahead of the game, StanChart Chief Executive Peter Sands told a conference call, adding the bank's share placing was absolutely not to build a warchest for a big acquisition.
Given that we see Asia having a shorter and shallower recession than other parts of the world, our clients are seeing a light at the end of the tunnel, and we want to anticipate that and support them.
In London, StanChart shares were down 4.5 percent, while RBS stock gained 1.7 percent.
In Australia, ANZ shares closed up 3 percent to A$19.57, outpacing a 1.1 percent rise in the main share index .AXJO. ANZ said the deal was expected to boost earnings within two years of completion.
ANZ is buying RBS's retail, wealth and commercial businesses in Taiwan, Singapore, Indonesia and Hong Kong. It will also buy RBS's institutional businesses in Taiwan, the Philippines and Vietnam.
Based on the most recent half year earnings, the deal would have added $460 million to ANZ's operating income and would have boosted Asia's contribution to ANZ's operating income to about 18 percent from about 14 percent, according to ANZ.
This is a solid outcome for ANZ that consolidates its growth strategy into Asia and gives added credence to its ambitions of becoming a regional powerhouse, IG Markets analyst Ben Potter said.
The acquisition price equates to 1.1 times net tangible book value, compared with 0.8 times paid by CBA for HBOS's Australian unit and 2.7 paid by Westpac Banking Corp (WBC.AX) for buying St George Bank. Both those deals were done last year.
ANZ raised about $2 billion in a share sale in May to strengthen its balance sheet and fund the acquisition, which sources and analysts had expected to cost around $775 million.
The low purchase price means ANZ still has more than A$4 billion of surplus capital and plenty of scope for further M&A, Citigroup said in a note to clients.
Ross Barker, managing director of Australian Foundation Investment Co, which manages about A$4 billion including ANZ shares, said: From the point of the view of their Asian strategy they probably would be looking to add extra bolt-on acquisitions to what they have done to improve their capacity in Asia.
RBS is seeking to exit or shrink its operations in up to 36 other countries, including India and China. In contrast, ANZ has been expanding further afield and has spent about A$2 billion over the past decade buying mostly minority stakes in banks from China to Vietnam.
Citigroup said India remains a big hole in ANZ's Asian strategy, where ANZ is in the process of acquiring a banking license. ANZ sold its Indian operations to Grindlays, a unit of StandChart, in 2000.
(Editing by Lincoln Feast and David Holmes)