With the sale of key ANZ retail and wealth assets in Asia, CBA emerges as the most regional of Australian banks.
The estimated A$110m sale of ANZ’s Singapore, Hong Kong, China, Taiwan, and Indonesia retail banking and wealth management operations to DBS effectively signals the end of the bank’s super-regional strategy. Though the bank states it wants to remain active in Asia’s institutional banking markets, it has indicated that it will also eventually offload its retail presence in Cambodia, Laos, the Philippines, and Vietnam along with its stakes in four Asian banks. The current deal will reduce ANZ’s retail customer base by more than half.
ANZ is hardly the first Australian bank to reverse an international strategy. NAB finally sold out of the UK market in the first quarter of 2016 and Macquarie Bank divested its private wealth arm in Asia as early as 2011. With cross-border banks increasingly costly to support as regulatory burdens have grown in the post-financial crisis era, there has been a distinct trend among international banks to exit operations in non-core markets.
As ANZ continues the divestment of its Asian retail banking assets, only Commonwealth Bank Australia (CBA) will remain as a significant player overseas. Indeed though CBA is the largest bank in Australia and formerly acted as the country’s central bank, its 80 branches and 100 ATMs across Indonesia mean that after ANZ’s divestment to DBS it is the Aussie bank with the biggest regional footprint. While CBA never trumpeted its international strategy in the way its competitors did, its focus on select markets like China and Indonesia appears to have paid off.
For example, the mortgage market in Indonesia, though slowing, is still growing at double-digit rates according to our Global Retail Banking Analytics. Commonwealth Bank of Indonesia’s focus on middle-income consumers – many of whom are new to proper retail banking – means its potential customer base in the country is trending higher as Indonesia continues to develop. CBA’s Indonesian arm is likely to grow much faster than its mature Australian and New Zealand businesses, where property booms appear to have already peaked.
When analysts talk about “the most Asian Australian bank” in 2017 we will have to get used to the fact that they will be referring not to ANZ – now solidly back to retail banking in Australia and New Zealand – but to that quintessentially Australian bank: Commonwealth Bank of Australia.
By Andrew Haslip, Head of Asia Pacific Content