NZ has taken a major step toward exiting Asian retail banking and wealth management with an agreement to sell businesses in five countries to Singapore’s DBS bank.

Australia’s fourth-largest lender on Monday said DBS will pay book value plus $110 million for assets in Singapore, Hong Kong, China, Taiwan and Indonesia.

Chief executive Shayne Elliott, who is undoing much of ANZ’s expansion into Asia under predecessor Mike Smith, said the sale represented the bulk of the bank’s regional retail and wealth management businesses – with remaining assets in Vietnam, Laos, Cambodia and the Philippines under review.

Elliott said ANZ had not committed to further sales and would not be drawn on a timeline for a possible broader exit.

“This is the heart of the business and we’re continuing to look at the other franchises,” Elliott told analysts.

“We don’t see a future for us in retail and wealth businesses across Asia and we will exit at the right time.”

ANZ said the sales’ impact on the bottom line – including writedowns and transaction costs – will be about $265 million. It will be initially higher in the first half of the bank’s 2017 financial year but will be offset back as the sales progress over future periods.

A trading halt placed on ANZ’s shares ahead of the announcement was lifted at 1100 AEDT. An hour later, the shares were down 2.0 cents, or 0.07 per cent, at $27.60 against the backdrop of a slightly higher market.

They recovered to be 9.5 cents, or 0.34 per cent, higher at $28.21 by 1240 AEDT.

ANZ said its focus in Asia will now be institutional banking across 15 countries.

“In retail and wealth, although we have grown a profitable business in Asia, without greater scale ANZ’s competitive position is not as compelling,” Mr Elliott said in a statement.

“To make a real difference for our retail and wealth customers, we would need to make further investments in our Asian branch network and digital capability … (which) do not make sense for us given our competitive position and the returns available to ANZ.”

The sales are subject to regulatory approval and are expected to take 18 months.

ANZ chief financial officer Michelle Jablko said 80 per cent of staff will move across to DBS.

The bank last week said it will book charges of $360 million against its 2016 full-year profit, just two months after it said it had already made provisions of $1.4 billion so far this financial year. ANZ is due to announce its full-year results on Thursday.

In May, the bank cut its interim dividend for the first time in seven years after first-half cash profit dropped 24.3 per cent, with a $260 million impairment on its investment in Malaysia’s AmBank among the one-off hits.

AAP

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