Sydney: Australia and New Zealand Banking Group (ANZ), Australia's fourth largest lender, wants to make a major deal to catapult it into the Asian big league alongside HSBC and Standard Chartered.
Chief executive officer Michael Smith told Reuters in an interview yesterday that he wanted to make a transformational deal within five to 10 years, once the bank had built out its Asian foundations.
"We have to have a good platform in place in terms of the region before we do any sort of transformational deal but at some stage we should do a transformational deal," he said.
"It seems extraordinary to me that an economy the size of Australia shouldn't have at least one bank in the region which is of significant size," he said.
"I think to be like a HSBC or a Standard Chartered in the region would be exactly right."
Australian banks traditionally punch below their weight: despite being ranked among the world's top 30 banks by market value, they do not venture too far from home.
ANZ itself has a chequered history in overseas expansion. It exited its business in parts of Asia, including a strong Indian operation in 2000, to focus solely on Australia where profit margins are healthy but growth is increasingly hard to find.
Smith, a sports-car enthusiast who is steering the bank back towards Asia, has set a target to turn in a fifth of profit from Asia by 2012 from 14 per cent now.
Targeting heavyweights
Smith, who was Asian head of HSBC before taking the wheel of ANZ in 2007, said recent acquisitions and planned expansions had already put ANZ cruising toward that target — and the next goal should ideally focus on competing with the regional heavyweights.
He turned to Asia after assessing dwindling growth opportunities in Australia, where the four major local banks control almost all mortgage lending and a good part of life insurance and wealth management.
Smith, who has overseen three acquisitions at ANZ, is also looking to grow Asian deposits to cut its reliance on costly wholesale funding, which is seen as a structural vulnerability for all of Australia's major banks and the economy in turn.
He is credited with picking up RBS assets in Taiwan, Singapore, Indonesia, Vietnam and Hong Kong for $550 million (Dh2 billion) last year, in what many consider to have been a bargain. He said valuations were rising in Asia but opportunities still existed.
