Long days and nights this week for some of Australia’s Big
Bankers and their auditing mates (they’re the folks who brought you the
NAB debacle for instance and its aftermath). Like the NAB,
Westpac and St George, ANZ balanced its half year on March 31 and for
the chaps at ‘Big Johnny’s’, there’ll be an All Black colouring that
will be of considerable interest.
Unlike the NAB, where it will be the size and nature of the John
Stewart-driven loss that counts, the market is expecting the ANZ result
to be very good, hence the move by the shares over the $19 mark.
But for John McFarlane’s ANZ, there’s a lot of interest in an update
on progress of the billion dollar plunge deeper into the Land of the
Long White Shroud. The ANZ reveals its results around April 27 and is
promising an update on the integration of New Zealand…but there’s a
sense of underwhelment in Melbourne.
The news from the ANZ bunker is encouraging on the way the National
Bank is settling down, but an independent-minded Reserve Bank of New
Zealand is making things tough for Big John’s mob. In fact it’s
hardball all the way on some key questions:
In fact Crikey hears the $60 million in integration cost
savings/synergies predicted when the deal was done last October could
very well turn out to be non-existent because of the RBNZ’s tough line.
The ANZ will say all’s well, but we hear the RBNZ is not all
enamoured of some of the ANZ’s ideas for integration and cost savings;
in fact it’s very much opposed and while negotiations are continuing
insiders warn shareholders should not be too optimistic.
The ANZ says it is due to start talks with the RBNZ on integration in April (aiming for a total integration by the end of 2005).
But we hear the RBNZ has insisted that the ANZ keep the back offices
for its New Zealand banking business separate to that for Australia:
the ANZ had wanted to integrate NZ with its Australian back office but
keep a back-up that was separate.
Well, the Kiwis aren’t that dumb: with the entire industry now owned
in Australia, the regulator in NZ wants what it calls “core
functionality” to be in place. That means a stand alone ability for the
National Bank to be run in the event of failure of an outsourcing
provider – to quote the Reserve “This doesn’t mean the core
functionality must be in New Zealand – it means legal and practical
access to it must be unimpeded.”
Very hard to do that when it is based in Melbourne and the business
is thousands of kilometres to the north-east in another country. The
Kiwis don’t appear to be convinced by Big John’s offers on this issue
by co-locating the Australian and NZ back office functions in Melbourne.
With the ANZ having two seperately run banks in New Zealand, the
RBNZ has forced Big John’s mob to maintain “adequate capital on a solo
basis” according to a speech by the RBNZ Governor, Dr Alan Bollard last
November. That means higher costs, not what the ANZ wants.
And those supposed integration benefits of $60 million will be down
the tube, unless there’s a change of attitude in Melbourne by Big John
and the lads (led by CFO Peter Marriott, who is overseeing the
integration from head office.)
Meanwhile the Steve Targett re-hiring has raised eyebrows inside the
ANZ. A case perhaps of the Prodigal Banker returning home? Well, sort
Targett was brought back by Big John – he was an ANZeder before
becoming a NABer and then flitting off to Lloyds TSB where he sold the
National Bank of NZ to Big John last year. (And some senior ANZ line
managers have had their nose put out of joint by the manner of the
announcement, with many reading about it first in the weekend media
before Bob Edgar, the Chief Operating officer, rang round on Sunday)
Anecdotal chat from inside ANZ says Steve was a good performer
before moving to Tokyo. Why, well that’s the stuff of inhouse legend,
but suffice to say that it made Steve something of a corporate hero
inside the Zed.
But despite what people might claim, the Tokyo gig (General Manager
Japan) was very much a sideways move; his Australian jobs as General
Manager Financial Markets and Chief Manager in Global Treasury, were
considered to be more significant managerial roles.
From Japan, he was headhunted by the NAB and worked in Mebourne
before moving to London in 2002 to run the European banks (NAB’s new
CEO, John Stewart, was chosen to head up the British banks after
Targett left to work for Lloyds TSB).
The ANZ says they did due diligence on his time in the NAB’s
corporate and institutional banks and are comfortable with his role;
but a question that should be asked is whether he had any role in
hiring the options trading team that eventually caused the Great Forex
Now he’s back at the ANZ and in charge of Institutional Financial
Services: a rival to Elmer Funke Kuper, head of personal wealth, and a
possible successor to Big John himself.