The ANZ reports its interim earnings next Tuesday and the market
seems a little confused about what to expect. The company’s shares had
a very solid run last month approaching the 45 day deadline for buying
the shares and getting the full franked dividend, and then continued to
run for a while, before some selling in the past week as investors took
their profits and awaited the results.

After falling to just over $18.50, it recovered late in the week to
ended around $19, a solid level for the market to watch the result.

There’s every indication the ANZ will do not that badly, CEO John McFarlane has got the company going well.

The only questions will be the question of integration savings in
New Zealand in the consolidation of the National Bank of New Zealand,
the attitude of the NZ Reserve Bank to the ANZ’s plans to centralise
all back office functions in Melbourne, and the just what’s going on in
the funds management joint venture with ING. The ANZ has a 49 per cent
stake in the joint venture.

While performance has improved wi the pick up in markets and
revenues and earnings will have lifted from higher market values and
better inflows, there’s a feeling inside the ANZ that operationally the
joint venture is not settled.

ANZ people are unhappy about the level of communication from ING,
especially about product manufacturing. ANZ executives feel the ING
side are not listening or reading the ANZ side very well and some of
the profucts in the managed funds areas are badly designed or don’t
reflect what ANZ customers might want.

In fact there’s a feeling these ING-built products are being thrust into the ANZ distribution system without much thought.

So consultants are being sought to try and imrove the
manufacturing-distribution process, which still remains the key
justifying reason for the joint venture in the first place.

So
why the surface indications will show the joint venture is working,
behind the scenes much friction remains. At the same time there’s been
a major shift in reporting structures at the top.

Elmer Funke Kupper has been shifted to running the Asian business
and fellow American Brian Hartzer has become managing director of
personal banking.

This is a new division, covering all of ANZ’s specialised businesses
aimed at personal customers including personal and wealth distribution,
mortgages, credit cards, merchant services, banking products and rural
banking. He was previously head of the Consumer Finance business, so
his role has been widened significantly.

The key area in terms of the internal politics of the ANZ in Brian’s job description is “personal and wealth distrbution”.

Now guess who was the previous boss of “personal and wealth
management Australia? Elmer was. Sounds like a job swap, a role
reversal, or a replacement, doesn’t it.

Certainly Personal and Wealth Distribution/ Management has been downgraded and lumped into Brian Hartzer’s new mega division.

The ING Australia joint venture is run by a senior ING executive.
But the ANZ distribution side shifts from Elmer’s area, or rather it
has been taken from Elmer, he has been given a completely different
area of responsibility, and Brian Hartzer now has to make the ANZ side
work in harvesting the funds from customers and pushing products that
people want.

Success in this area could be vital in any succession hopes he might have.

With Steve (NAB) Targett returning in July to run an expanded
Institutional banking business, the succession race to replace
McFarlane seems to be in place.

Peter Fray

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