Australia’s private banking division intends to focus on domestic
growth, for ANZ Private Bank the picture is very different. Growth
in Asia is the plan, and not just in the established centres of
Hong Kong and Singapore.
ANZ is looking to push farther into Asia, in line with its
long-term growth strategy, and to that end has marked the turn of
the Chinese New Year by unveiling an aggressive blueprint for
expansion. Over the next three years, ANZ Private Bank intends to
double its Asian operations’ share of overall earnings, says Mark
Ellis, managing director of the private bank. “At the moment in
private banking, the Asian market accounts for about 10 percent of
earnings. We want that to rise to 20 percent within three years,”
he asserts.
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The private bank’s strategy is more nuanced than a simple wholesale
shift into an unknown market, however. Instead, ANZ is looking to
build on the links between its domestic and overseas interests. “We
have a lot of expats working in Asia and Asian émigrés from
Australia that are either still living here in Australia or those
who have moved back to Asia and we want to manage those
relationships,” Ellis reveals. “Whilst we have a good client base
already in Asia, there’s a big demand for extra services.”
ANZ sees Asia not just as an opportunity to capture more wealth,
but as an increasingly integral part of Australian existence. At a
business summit in February, CEO Mike Smith noted that “half of
Australia’s population growth is from migrants, and Asia accounts
for over 40 percent of that”.
The year to September 2007 was a good one for ANZ Private Bank:
profit after tax grew 16 percent on the back of a 35 percent
increase in revenue growth. Client numbers rose by 20 percent over
the period and net interest by 21 percent.
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By GlobalDataThe bank attributed part of this growth to increased sales of
advisory products and, as with CBA, such offerings play an integral
role in ANZ’s future plans, says Ellis, with a new head of
advisories for the region likely to be in place shortly. A
comprehensive outlook is the order of the day, with the new
advisory business being joined by a new head of investment products
for Asia in order to maximise returns.
ANZ is hiring more advisers and private bankers as well as
extending the range of products and services it provides within
Asia. A dedicated head of private banking for Hong Kong has now
been appointed, though the bank is looking to extend its reach
beyond the typical Asian wealth centres. While services in
Singapore and China remain paramount, recruitment strategy has
centred on the hiring of private bankers who speak languages
including Mandarin, Cantonese, Indonesian, Japanese and
Korean.
Existing private banking centres in Hong Kong and Singapore will be
expanded this year, and will remain the focal point of ANZ’s Asian
activities, but Ellis, appointed managing director of ANZ’s private
banking arm in April 2007, also points to other Asian countries as
future business prospects.
Well-positioned for Asia
While CBA now does not believe its global strategy to be
sufficiently advanced to require a Singapore business, ANZ is
confident that it is well-positioned to take advantage of the
opportunities that Asia is presenting private banks. A slowdown in
global growth is leading many institutions to increase their
presence in emerging markets in 2008, even if Asian markets
themselves are also expected to show signs of reduced activity. The
crucial factor for ANZ is the relative positions of the Australian
and Asian markets.
“A lot of our strategy has got to do with the sheer growth within
the Asian market – various economies within Asia are growing at 7
or 8 percent per annum, whereas Australia is growing at 3.5
percent,” says Ellis.
The challenge will not be easy, nor is there a clearly defined
strategy for banks to follow. Indeed, by contrast, many of the big
global players – already well advanced in their Asian operations –
are now looking to extend their offerings to wealthy Australians.
Merrill Lynch is looking to increase its staff numbers in Australia
and New Zealand by 50 percent by 2009, while UBS, HSBC and
Citigroup are also bolstering their interest. Standard Chartered,
meanwhile, is following a similar route to ANZ and looking to
target expatriate Australians now resident in Asia.
For Ellis, this competition serves to highlight the strength of
ANZ’s position. “Standard Chartered has a very good Asian franchise
– what they don’t have is a strong Australian franchise,” he says.
“Some of the products we’re providing in Asia, such as
dual-currency mortgages – we can fund these deals into the
Australian market. Standard Chartered will have to use third-party
providers.”
Cross-border collaboration is one of the pillars of ANZ’s Asian
approach. The private bank says that high net worth individuals who
operate in China will be able to open a transaction account with
ANZ China while still on Australian soil, with the same services
available were the scenario to be reversed. But the bank is also
aware of the demand for specialisation. “We’ve designed commodities
funds to suit the specific needs of our Asian clients,” Ellis
adds.
ANZ’s rivals have little established presence within the Asian
markets, says Ellis. CBA is looking closer to home, Westpac is
continuing to hone its fund management techniques and National
Australia Bank looking to the European market as a way to ease back
into the wealth management sector. By contrast, ANZ has completed
numerous partnership deals within Asia over the past 18 months and
now retains an interest in the banks such as Malaysia’s AMMB Group
and the Vientiane Commercial Bank in Laos.
Leveraging domestic strengths
Now ANZ believes that it is well-placed to leverage its domestic
strengths in private banking within the global marketplace. Says
Ellis: “Whilst we have a desire to sell product, it’s not a pure
strategy based on getting funds under management. We’re focused on
deposits, funds under management and loans, so it’s a trifecta pure
strategy.”
The private bank believes that this has also proved appealing to
new appointees, even within a highly competitive marketplace. “It
has been challenging but one of the advantages we’ve got is that
when you talk to people they want to work with an institution that
has got a strong base and a clear strategy. There’s a lot of
attractions there,” Ellis concludes.
