Banking & Finance

ANZ talks up regional domination

No backtracking on Asian expansion plans, says international banking chief

PUBLISHED : Sunday, 14 February, 2016, 5:21pm
UPDATED : Sunday, 14 February, 2016, 5:21pm

ANZ, now Asia’s fourth-largest bank and closing fast on third-placed Citi, is not about to dismantle former chief executive Mike Smith’s expansionary strategy in Asia, its new group executive for international, Farhan Faruqui, says.

He told the South China Morning Post ANZ was focused on cementing its place as a “super-regional” bank, as one of the new wave of regional players poised to supersede and overtake global banks as the likes of HSBC, Standard Chartered and Citi continue to roll back their presence and capital commitment in the region.

Faruqui’s clarification in Hong Kong came fresh on the heels of comments made by new ANZ chief Shayne Elliott, who succeeded the larger-than-life Smith last month. Elliott’s commitment to raising profitability in Asia had sparked concerns he was planning to backtrack on his predecessor’s expansionary strategy.

We don’t have a home market problem like some US or European institutions do
Farhan Faruqui, ANZ

“When you look to Asia, our strategy is solid. It’s absolutely clear,” Faruqui said. “We want to be a top three commercial bank in Asia – not a second-tier but a world-class bank. There is no question in our mind if you look at what is our No 1 priority outside of Australia and New Zealand, it is China. This has to be the core of our growth proposition. We absolutely have to dominate and be strong particularly in those China-Australia and China-New Zealand trade corridors in this region.

“We don’t have a home market problem like some US or European institutions do. And we don’t have an over-expansion problem like our regional competitors. We are in a good spot. We have the ability to now build businesses with client because other banks are retreating capital here.”

Both Faruqui and Elliott previously worked at Citi. Faruqui was the American bank’s head of corporate and investment banking, Asia-Pacific, before joining ANZ in May 2014.

“Eight years ago, if you told someone working in an international bank working in the corporate business in Asia that ANZ would be a top five bank in Asia, they would have laughed at you and said there was no chance of that happening,” Faruqui said. “If you had asked me eight years ago, when I was at Citibank, I would have laughed at you and said there is no chance.”

He said ANZ was not cutting back on its greater China headcount of 4,000 but was actively recruiting for its onshore markets team across the foreign exchange, rates, credit, product development and capital markets spectrum.

“We are always looking for great people, whichever business they do,” Faruqui said. “We will continue to invest in places like greater China for sure.”

Under Smith, the bank transformed itself from an outer player ranked in the 30s into fourth place regionally. The bank now sees itself one of the new wave of “super-regionals” that will overtake and dominate the places previously held by global banks, who are ever less likely to deal with growing businesses except those among the world’s largest 500 to 1,000 corporations.

“The regional banks will ultimately become bigger and bigger in the region with the international banks increasingly become niche players in Asia – because those mid-tier [corporate names] will become global champions of tomorrow and because the international banks wouldn’t have banked them when they were needed,” Faruqui said.

“ANZ is going to be relevant tomorrow because of what we are doing today and is going to be dominant because of what we are doing today because these are going to be the clients who are going to become global champions in the next 10, 15, 20 years.”

In mergers and acquisition finance, as more Chinese companies go on the search to buy their way into multinational status, ANZ is now the second-largest player, controlling 10 per cent of the market, just behind the other new power broker, Bank of China (Hong Kong).