ANZ's war chest

FAIRFAX

STEPPING OUT: The prospect of a large ANZ spending spree came as its retail shareholders responded in droves to a previously announced fund-raising exercise.

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ANZ Bank has set its sights on a more ambitious sweep of acquisitions in Asia, beyond the Royal Bank of Scotland assets for which it is bidding - its small investors have presented it with a A$2.2 billion capital raising bonanza.

The huge intake of funding has also led to increased speculation that ANZ was preparing for a renewed tilt at Suncorp-Metway's troubled banking division, although the Australian competition regulator indicated yesterday that such move by a big four bank would be resisted.

The prospect of a large ANZ spending spree came as its retail shareholders responded in droves to a previously announced fund-raising exercise with an initial target of A$350 million.

The bank had placed A$2.5 billion of new stock with institutions and capped the total of additional funding required at A$2.85 billion.

However, it had not planned for such a huge response from its small shareholders, of whom 45 percent - 178,000 people - applied for new stock at the discounted A$14.40 a share.

Of those, about three-quarters asked for and received the A$15,000 worth of shares, the maximum allowable.

ANZ had put a tight limit on the issue, but given the willingness of investors to offer so much cheap capital at a time when debt financing is so expensive, the bank snapped up all the money available.

ANZ has now harvested A$4.7 billion of extra funding, which takes the total amount of capital raised through recent new equity issues by big four banks to about A$15 billion.

The A$2.2 billion raising was also a record for an Australian listed company through a share placement plan, eclipsing the Commonwealth Bank with its A$865 million response last December and Macquarie Group's near-A$700 million in April.

However, the downside of the raisings will be to dilute the existing shareholder base and put pressure on dividends when profits are expected to fall by 20 percent this year.

In ANZ's case, its equity has grown by 13 percent. Last night analysts forecast a fall in earnings per share of about 5 percent as a result. Its shares fell 45c - or 2.75 percent - to A$15.85. But the main focus was the bank's increased firepower.

About half of the original new money was set aside to bid for RBS's businesses in Hong Kong, Singapore, Taiwan, Indonesia and Vietnam. ANZ said its exclusive talks with RBS were "progressing, but are incomplete".

- © Fairfax NZ News