ANZ Banking Group CEO Shayne Elliott says the Reserve Bank of New Zealand's proposals to increase banks' regulatory capital requirements would come at a cost, and ANZ can't expect its shareholders to "unreasonably subsidise" this.
Speaking to analysts after ANZ issued its interim financial results, Elliott said ANZ NZ, this country's biggest bank by some distance, is performing well.
"There are however obvious concerns about potential changes to the capital regime. Our primary focus is the impact of these proposals on the New Zealand economy. Let's be clear. What's good for New Zealand is good for ANZ," Elliott, a New Zealander, said.
"We understand and support the desire for a sound financial system. But all insurance policies come with a cost, and we need to understand what level of insurance is appropriate and affordable for the New Zealand community."
"It's too early to comment on the impact for ANZ other than to say we're in a better position to manage any change given the simplification and strengthening of our New Zealand business," said Elliott.
"If the rules do change we have a number of practical options to manage and optimise our capital and we have a responsibility to do so. We've been active in New Zealand since 1840, longer than any other bank, and we're one of New Zealand's biggest investors."
"It's our intention to be active and successful in New Zealand, employing thousands of kiwis, paying a significant amount of tax, and helping New Zealanders thrive for many years to come. But we can not expect our shareholders to unreasonably subsidise those ambitions. We will therefore be making an active contribution to the debate because it's important for New Zealand to get this right," Elliott said.
ANZ NZ on Wednesday posted a 4% drop in half-year net profit after tax to $929 million. Last year ANZ NZ made net profit after tax of a shade under $2 billion and paid ordinary dividends of $1.6 billion. The ANZ Group has estimated it would need between $6 billion and $8 billion of new capital to meet the Reserve Bank's proposals and would have five years in which to implement them.
Responding to a question seeking more detail, Elliott said ANZ was referring to the capital it puts into NZ, and then how it deploys that capital in NZ, in terms of into which sectors and what returns are required.
"I think it's as simple as that. I'm not suggesting any of that's easy. We're going to go through a consultation. [There's] a really long time to comply with that, and we feel five years or whatever the number will be at the end will be sufficient for us to rebalance our portfolio as a group and within New Zealand. And all we were referring to is we've shown that we're not shy of taking hard decisions. And we will act, and we actually have a responsibility to act responsibly with our shareholders capital, and so we will do so," said Elliott.
"But it's the same old tools we always have, we'll look at our cost base, we'll think about the capital allocation, we'll think about how we price that capital, what we ask the business to deliver on it, and we'll do all that appropriately at the right time."
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14 Comments
ANZ takes a quarterly profit of a cool Billion from the NZ economy... ANZ CEO - "Look how wonderful ANZ is to you paying taxes and staff. How on earth could our owners increase our capital holdings?" - Sounds like a manipulative abusive relationship to me. I don't know, maybe take it from the Billions you earn from us every year. It's not even an expense, it stay on your balance sheets. Savers should not be at risk, it should be your capital on the line.
Actually it should be savers that are at risk, they are taking risk leaving money in a bank, it's not risk free. If you want a risk free investment, choose Goverment bonds. End of the day, bank deposits have a higher risk profile than other securities.
Either you accept lower returns, and have a risk free security. Or you put up with the risk and take the higher returns.
Maybe in line with the tobacco industry, the government could start working on banks and how they are allowed to advertise. Legislate against all the glossy adverts that show how banks can help you get ahead in life. Replace with standard warnings 'Your money is not guaranteed safe in our institution.' 'One day you may be forced to give up some of your savings deposited here to bail us out'.
Pure rubbish to the extent of being creepy. It's the cost of doing business not what Elliott calls "unreasonably subsidise"
What next? Paying the wages of staff being called an "unreasonable subsidy" from shareholders.
Mr Elliott perhaps should do what the rest of us in business have to do when we can't afford the cost of meeting our responsibilities. Shut up shop.
You probably wrote your own answer there. He and his business are nothing like "the rest of us". These people are very much above "the rest of us".
I frowned a bit at this, is this and its accompanying paragraph a direct threat?
"And all we were referring to is we've shown that we're not shy of taking hard decisions. And we will act, and we actually have a responsibility to act responsibly with our shareholders capital, and so we will do so," said Elliott."
Payday Loans...coming home to roost....Kiwis must be so proud of our so-called billionaire bankers operating around the world, making ends....meet.
https://www.stuff.co.nz/business/industries/112347795/the-kiwi-accused-…
You can expect the UK legal system to be weighted towards Andrew Pearse. The establishment definitely wouldn't want any precedents settled here. Would probably raise some angst among the banking and financial set.
https://www.bloomberg.com/news/articles/2019-03-29/ex-credit-suisse-ban…
Channelling Mandy Rice-Davies, in relation to ANZ's stern defence of their super-profits: "Well, he would, wouldn't he"...
ANZ can't expect its shareholders to "unreasonably subsidise"
Multi-billion dollar annual dividends from the NZ big-4 to their Australian parents have effectively subsidised their shareholders for decades. Shayne, buddy, don't piss on us and try to say it's raining.
I think we should be taking this opportunity to once again ask: are we happy with the overwhelming majority of our banking profits going offshore to Australia? Last year the profit from the big four Australian owned banks was more than the combined profits from all the rest of the nzx companies combined.
My next mortgage is going to be with a kiwi based bank.
Correct me I am wrong, but had the government not stepped in with the deposit guarantee your bank would have failed. You got a bail out and yes you did pay, but you would not be in business and your shareholders would have lost a substantial amount. If the bank was not so highly leveraged and you had your customers trust then you wouldn't have needed the government to step in and guarantee deposits. The Aussie 4 have been the most profitable banks in the world, other banks shareholders are envious of the extraordinary profits achieved, time to set in motion steps to remove the too big to fail advantage and the shareholders to acknowledge that extraordinary profits can not continue as infinitum. Maybe it is the banks shareholders who are now being unreasonable.
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