ANZ Prepares to Bid for RBS' Asian Operations

Strategic Insights -

The Australian and New Zealand Banking Group is poised to bid for the Asian operations of the Royal Bank of Scotland Group, potentially for up to US$3 billion. The deal would include RBS' Hong Kong and mainland businesses, which employ 1,400 people. ANZ has hired Credit Suisse to advise on the deal, a sign that the bank is seriously considering a takeover. ANZ's strategy is to create a "super-regional" bank focused on the Asia-Pacific region, and acquiring RBS' Asian operations would be a significant step in achieving this goal.

Key Takeaways:

  • ANZ is preparing to bid for RBS' Asian operations, potentially for up to US$3 billion.
  • The deal would include RBS' Hong Kong and mainland businesses, which employ 1,400 people.
  • ANZ has hired Credit Suisse to advise on the deal, indicating serious consideration of a takeover.
  • ANZ aims to create a "super-regional" bank focused on the Asia-Pacific region.
  • ANZ has worked up "very detailed" plans for the acquisition and is prepared to offer up to US$3 billion.
  • ANZ is unwilling to risk making an offer for the investment banking unit in case top bankers leave, and may instead cherry-pick individual high-earners through headhunters.
  • ANZ's chief executive, Mike Smith, has named increasing the bank's operations in Asia as his priority since taking the helm in 2007.
  • RBS has put its retail and commercial operations in Asia on the block, including 170 bank branches and a business loan division.
  • RBS' investment banking division may also be included in the sale, but its advisers have not confirmed this.
  • Other potential bidders for RBS' Asian operations include Standard Chartered, HSBC, and mainland lenders such as Industrial and Commercial Bank of China and Bank of China.

Statistics:

  • 1,400: number of people employed by RBS in its Hong Kong and mainland businesses.
  • 170: number of bank branches RBS has in Asia.
  • 7,000: number of RBS employees in Asia.
  • US$3 billion: potential value of the deal.
  • US$4.7 billion: value of Wing Lung Bank's sale to China Merchants Bank in June 2010.
  • 3.1 times: valuation of Wing Lung Bank's sale to China Merchants Bank (based on book value).
  • HK$265.08 billion: RBS' annual loss in 2010 (24.1 billion GBP).

Sources:

  • The Australian and New Zealand Banking Group press release
  • Royal Bank of Scotland Group press release
  • The Financial Times
  • Bloomberg News
  • Reuters