If ANZ does become a super-regional bank, an Asian heavyweight with a core franchise in Australia, then one bit of it’s going to look mighty top-heavy: New Zealand, which generally accounts for 20% to 25% of group lending and deposits. "They are way, way too big in New Zealand," says Brian Johnson at CLSA.
Asked if ANZ is too big in New Zealand, Mike Smith says: "Would you want to be the biggest bank in New Zealand or the biggest bank in China? It’s quite an easy answer I suppose. But we are where we are." The position has perhaps looked artificially bad recently because New Zealand’s economy has done so much worse than those of Australia and most Asian countries. "The disadvantage of being the biggest bank in New Zealand was the last couple of years when the economy absolutely fell over. But I guess you could then argue it’s best in a recovery to be the biggest bank because you’re going to see the most benefit."
But would the assets be better deployed elsewhere? "New Zealand can provide good annuity income," Smith says. This annuity stream, at a time when a funding base is going to be important to ANZ regionally, seems to suggest a sale is unlikely.
