ANZ to Invest $300 Million in China, Expand to 20 Outlets

Australia & New Zealand Banking Group Ltd. (ANZ), Australia’s third-largest lender, plans to invest A$300 million ($300 million) and more than triple the size of its network in China, the world’s fastest-growing major economy.

The number of outlets will be increased to 20 in the next five to 10 years, up from six now, the Melbourne-based lender said yesterday. The capital increase, which is subject to regulatory approval, is the first since the bank invested A$395 million while incorporating its Chinese unit in 2010.

ANZ Bank, one of Australia’s so-called four pillar lenders, joined rivals such as HSBC Holdings Plc and DBS Group Holdings Ltd. in adding to investments in China as demand for financial services dropped in their home markets. Foreign banks’ combined profit from China more than doubled to a record 16.7 billion yuan ($2.64 billion) last year.

“The economy is still very well-placed to expand,” Chief Executive Officer Mike Smith said in an interview in Beijing today. “At the moment, the emphasis has to be on business here in China.”

ANZ Bank also plans to continue hiring in China at a pace similar to the growth rate over the past four years, when the lender increased its China workforce from less than 100 to close to 700 people now, Smith said.

China is a “significant” part of the bank’s plan to earn as much as 30 percent of profit from the Asia-Pacific region outside Australia and New Zealand by 2017, Charles Li, chief executive officer of ANZ China, said yesterday. The share was about 15 percent in November, when the target was announced.

DBS, HSBC

Smith said today the expansion target is based on organic growth. The bank has no immediate plan for an acquisition in Hong Kong as “everything is still expensive,” he said.

DBS, Southeast Asia’s largest bank, said last month it would inject 2.3 billion yuan into its Chinese unit, adding to a 4 billion yuan initial investment five years ago. HSBC, based in London, said in February it would like to increase its China branch network almost eightfold toward 800 over the medium term.

ANZ Bank in March became the first Australian bank to receive a license to provide yuan-denominated services, including deposits and loans, for Chinese citizens. That will enable it to tap local household savings, which amounted to 36.9 trillion yuan in March.

Shares of ANZ Bank fell 1.8 percent to A$21.73 in Sydney as of 12:21 p.m., paring this year’s gain to 5.9 percent. Australia’s benchmark S&P/ASX 200 index has increased 3.2 percent during the same period.

ANZ Bank is also seeking a banking license in Thailand this year or next year, Smith said.

To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net; Susan Li in Hong Kong at sli31@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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