Hefty price puts ANZ plan to buy HK bank on hold

Australia and New Zealand Banking Group, Australia's third-largest bank by market value, has abandoned a plan to expand in Hong Kong by acquiring a local bank, mostly because the families controlling the banks want too much money.

ANZ chief executive Michael Smith said earlier this year that the Melbourne-based bank was interested in taking over a local bank as a way of expanding its retail network and customer base in Hong Kong, which is a major offshore yuan trading centre.

People familiar with the situation told the South China Morning Post that ANZ recently completed an internal review of all family-controlled banks in Hong Kong and concluded that it was not the right time to proceed.

"The price level is just not comfortable enough," said one banker. "I think most of the people in the market share the same view that there is certainly a gap between how much foreign banks want to pay and how much the local banks are asking."

When asked about its plan to acquire a bank in Hong Kong, a spokesman for ANZ said: "We are focused on organic growth in greater China. We have built a strong regional platform and we are very well capitalised."

ANZ's revenue in the so-called greater China region, which includes mainland China, Hong Kong, Macau and Taiwan, increased 24 per cent in the first half of this year from a year ago. One of the Big Four banks in Australia, ANZ is the most aggressive in terms of expanding outside its home country, particularly in Asia. In 2007, the bank hired Smith, who is a former top executive at HSBC in Hong Kong, as chief executive.