Anz To Set Up Online Bank In Asia
Sydney Morning Herald
Tuesday July 18, 2000
ANZ Bank is set to plunge back into Asia, joining with one of Singapore's biggest banks to spend $US100 million ($170 million) over three years to create the region's first pure Internet bank.
ANZ, which is soon to complete the $3.1 billion sale of its South Asian banking operation, ANZ Grindlays, will join with Overseas Chinese Banking Corp (OCBC) to form the Net operation. The yet-to-be-named online bank plans to make a profit by 2002 by targeting the estimated 40 million ``wired affluent" consumers expected in Asia by 2005 with a full retail banking proposition.
The joint venture marks another step in ANZ's aggressive online push, which has involved partnerships with online brokers Etrade Australia and Boom.com, as well as alliances with smaller players such as Multimedia.com.
It is expected that both banks will initially look outside their home markets and focus on countries such as Hong Kong, Taiwan, Malaysia and Thailand.
Whether there will be a closer relationship between the two similar sized banks is unclear, but the venture will make strategic investments in partner companies in online financial services and content provision.
ANZ and OCBC have overlapping operations in 11 Asian countries including Singapore, Hong Kong, China, Taiwan, Malaysia and Indonesia.
But for ANZ, Grindlays was by far its most important presence in the region.
The first partner for the online bank will be Hong Kong online discount stockbroker Boom.com, in which ANZ recently invested $14 million for a 10 per cent stake.
ANZ and OCBC will be one of the first groups to propose an online bank that is separate from their ``bricks and mortar" operations and separately branded. Despite the worldwide emergence of pure Internet banks, in the US Internet banks like Wingspan.com have less than 10 per cent of all online accounts.
In Britain there has been little evidence that online banks, like Prudential's Egg, can reduce the market's reliance on bank deposits, and questions linger about business models.
ANZ says the Asian market is more attractive because the region is underserviced in online banking, ATM networks are open, there is high mobile phone penetration and only existing banking licences can be upgraded or converted to an online bank.
``Our conclusion is that several Asian markets are more attractive than the US or the UK, driven by e-growth, technology and financial investment behaviour," said ANZ's head of international, Mr Elmer Funke Kupper.
ANZ plans to launch the bank at the end of this year.
The move comes ahead of a strategy briefing to broking analysts today, as the company aims to simplify and focus its operations while building new positions via e-commerce.
Like the other big three Australian banks, ANZ has been reasonably successful in bringing its Australian customers online, with 300,000 now using anz.com.
The joint venture with Singapore's OCBC allows ANZ to reduce the early start-up costs, which otherwise might have diluted the bank's earnings record.
ANZ has left open the option of spinning off the online banks at a later date.
Aussie tiger
* ANZ joins with OCBC, Singapore's second largest bank with $US10bn market capitalisation and total assets of $US32bn
* Joint venture will use the two groups' existing licences but may seek own at a later dat
* ANZ expects a relatively early payback in two years to make a profit
* Will complement further e-commerce initiatives in Asia
*Headquartered in Singapore but targeted at other Asian nations
© 2000 Sydney Morning Herald