Anz Quits Futures Because It's Not One Of Top Players

Sydney Morning Herald

Friday December 1, 2000

Anthony Hughes

ANZ Banking Group has provided some substance to its recent strategic redirection by quitting the futures trading business an operation where it was not globally competitive.

As bank shares soared again yesterday and ANZ hit an all-time high of $15.21, the bank said it would close its futures operation, ANZ Futures, over the coming weeks.

In July, ANZ made a radical departure from the bancassurance strategy embarked upon by rivals Commonwealth Bank and National Australia Bank when managing director Mr John McFarlane said it would operate its divisions as 21 separate businesses and invest only in those in which it had a competitive advantage or was globally competitive.

In reality, the exit from futures, which employs 17 people, is a carry-over from the bank's 1999 sale of its retail stockbroking operation to Salomon Smith Barney. ANZ has an ongoing strategic alliance with online broker Etrade Australia.

A spokesman for ANZ, Mr Paul Edwards, said it would take about six weeks to transfer its clients to other brokers.

He said futures broking was dominated by global specialist players and ANZ did not believe it could be a top five player.

``It's not a big announcement, but from it we should take that they are driving forward the specialisation strategy," one analyst said. ``(But) they oversell it when they describe the 21 discrete businesses emulating the focus and culture of the US mono liners."

ANZ finished 1c lower at $15.02 yesterday after peaking at $15.21 in another strong day for the banks, with St George and Commonwealth also touching records. CBA broke through $32 before late selling cut its share price 2c lower at $31.69, but National Australia Bank led the charge and finished 75.5c higher at $29.82.

Broking analysts remain concerned that ANZ does not hold a competitive position in fields such as funds management, but there are suggestions the bank has been more actively looking at opportunities to expand its distribution network, possibly through the acquisition of financial planning groups.

But the bank has attracted a better following from investors since its exit from ANZ Grindlays earlier this year, reducing the perceived risks in the bank's lending portfolio. In late October, ANZ reported a net profit of $1.703 billion, up 15 per cent.

The bank used the bulk of the profits from the Grindlays sale to take a $361 million writedown that will see the company reconfigure its metropolitan branch network. The modernisation of the network will see branches configured around three new customer businesses focused on wealth management, general banking and small business.

Analysts say the rise in bank stocks reflects the solid operating environment, better than expected profits and the switch by investors from growth to value investments.