Lost or stolen cards replaced instantly with ANZ digital wallets

ANZ today announced its customers can continue to use their digital wallets when they report their card as lost or stolen with a new service that automatically updates their replacement card details.

As soon as a customer calls to report their debit or credit card as missing, ANZ puts a stop on the original card and automatically uploads the new virtual card details to the customer’s digital wallet.

ANZ Managing Director Products Australia, Katherine Bray said: “Our customers report about 670,000 cards as lost or stolen each year and we know waiting for a new card to arrive can be a real inconvenience.

“Now our customers can keep using their digital wallet, whether it’s Apple Pay or Android Pay, to make purchases while they wait for the new physical card to arrive in the mail.

“For many customers their smartphone is now the primary way they do their banking, including making purchases, so we’re working hard to keep improving their mobile experience with changes like this.”

ANZ has also made it possible for customers to keep their existing Personal Identification Number (PIN), provided it hasn’t been compromised, meaning less change with the same high level of security.

ANZ is the only major Australian bank to offer both Apple Pay and Android Pay with about 8.3 million transactions made across the bank’s digital wallets last year.

ANZ agrees to sell UDC Finance

ANZ today announced an agreement to sell UDC Finance, the asset finance business of its wholly owned subsidiary ANZ Bank New Zealand, to HNA Group, a global company focused on tourism, logistics and financial services.

The sale price is ~NZ$660m and will benefit ANZ Bank New Zealand Limited CET1 ~50 basis points and the ANZ Group by ~10 basis points.

The sale reflects a continued focus by ANZ on simplifying its business and capital efficiency.

ANZ New Zealand CEO David Hisco said: “The sale of UDC is consistent with our strategy to simplify the bank and is a good outcome for customers and staff. HNA Group is one of the world’s largest asset finance and leasing companies, and it intends to preserve UDC’s operations including offering continued employment to all staff.”

The transaction also includes the Esanda name and trademarks in Australia and New Zealand. The additional consideration for the name and trademark sale is not material to ANZ.

The UDC sale is subject to closing steps and conditions including engaging with investors on the replacement of the Secured Investment program and regulatory approvals. Completion is expected late in the second half of the 2017 calendar year.

Jobs Ads Fell In December – ANZ

According to the ANZ,  Job advertisements fell 1.9% m/m in December following a 1.6% rise in the previous month. Annual growth in job ads dropped to 3.7% y/y, down from 6.0% y/y in November.

In trend terms, job ads rose 0.3% m/m in November, a touch lower than the 0.4% rise in the previous month. Annual growth remained stable at 4.7% y/y in the month of December, but has fallen sharply from an average of 9.4% y/y over Q1 2016.

ANZ Senior Economist Jo Masters commented:

“After four consecutive monthly rises, ANZ job ads fell sharply in December, the first fall since July 2016. This weakness is consistent with softer business conditions and corporate profitability.

While a disappointing outcome, we see the labour market as losing some of its previously strong momentum not stalling. Indeed, ANZ job ads rose by 0.5% over Q4 and in trend terms continue to rise.

While the labour market has clearly lost some momentum, business and consumer confidence remain elevated, capacity utilisation appears to be on the rise, and retail sales have strengthened recently. As such, we continue to expect conditions in the labour market to support an ongoing, albeit gradual, decline in the unemployment rate this year.”

ANZ agrees to sell its 20% stake in Shanghai Rural Commercial Bank

ANZ today announced it had reached agreement to sell its 20% stake in Shanghai Rural Commercial Bank (SRCB) to China COSCO Shipping Corporation Limited and Shanghai Sino-Poland Enterprise Management Development Corporation Limited for A$1,838m, equivalent to ~40bp. They say there is no material impact on overall profitability from the sale. However, in the financial year 2016 ANZ recorded a post-tax profit of A$259m (full year profit) associated with its 20% stake in SRBC.

This underscores the re-balancing of ANZ back to Australia as mentioned in the earlier results.

The agreement will see COSCO and Sino-Poland Enterprise each acquire 10% of SRCB for a total consideration to ANZ of RMB9,190 million (A$1,838 million). The sale price represents a price-to-book ratio of approximately 1.1 times SRCB’s net assets as at December 2015.

The sale will increase ANZ’s APRA CET1 capital ratio by ~40 basis points.

ANZ’s relationship with SRCB has been a successful financial and commercial transaction since the investment was made in September 2007.

  • ANZ has invested a total of A$568 million in SRCB. Since 2007, ANZ has recognised A$1.3 billion of equity accounted earnings and received A$178 million in dividends. In the 2016 Financial Year the SRBC investment contributed A$259 million to ANZ’s post-tax profits.
  • ANZ’s minority investments in China have also helped provide ANZ with a stronger understanding of the Chinese banking system which has supported the expansion of ANZ’s branch network in China and the approval of ANZ’s full banking licence in China in 2010.

ANZ Deputy Chief Executive Officer Graham Hodges said: “This partnership has been beneficial for both ANZ and for Shanghai Rural Commercial Bank. SRCB is now a strong, successful bank with a prosperous future.

“As we have previously stated, the sale reflects our strategy to simplify our business and improve capital efficiency.

“The sale will also allow us to focus our resources on our Institutional Banking business in Asia. This includes a significant commitment to China over the past 30 years with 100% ANZ-owned branches in Beijing, Shanghai, Guangzhou, Chongqing, Chengdu, Hangzhou and Qingdao serving our institutional clients,” Mr Hodges said.

After transaction costs and taxes, the sale price is broadly in line with the carrying value of the investment in ANZ’s accounts as at 30 September 2016. This includes accumulated equity accounted profits and foreign currency translation reserves over the period of investment. However, if completion occurs after the end of the first half of the 2017 financial year, accounting timing differences will result in a negative impact to net profit after tax in the first half, and a largely offsetting positive impact at completion.

The sale, agreed on 31 December 2016, is subject to customary closing conditions and regulatory approvals and is expected to be completed by mid-2017.

ANZ’s OnePath implements improvements overseen by ASIC

ASIC has confirmed the completion of an independent review by PwC of Australia and New Zealand Banking Group’s (ANZ) OnePath’s compliance functions that was announced in March 2016.

The Independent compliance review of ANZ’s OnePath following breaches resulting in compensation of approximately $4.5 million.

This review followed the reporting to ASIC of a significant number of breaches by the ANZ Group in relation to its life insurance, general insurance, superannuation and funds management activities operated through its wholly-owned OnePath group of companies.

PwC has now completed its review. PwC made six recommendations for improvements to OnePath’s compliance framework. OnePath has implemented four of these recommendations and has committed to complete the other two by early 2017. ASIC will continue to monitor OnePath’s implementation of these final two recommendations.

Background

The ANZ Group’s subsidiaries covered by this review include OnePath Custodians Pty Ltd, OnePath Life Limited, OnePath Funds Management Limited and OnePath General Insurance Pty Limited.

See 16-069MR Independent compliance review of ANZ’s OnePath following breaches resulting in compensation of approximately $4.5 million.

ANZ Announces Appointment of Customer Fairness Advisor

ANZ today announced the appointment of Colin Neave AM as its Customer Fairness Advisor, a new role to help improve fairness of the bank’s products and services for retail, small business and wealth customers in Australia, reporting to Chief Executive Officer Shayne Elliott.

Following a distinguished career of public service at the highest levels, Mr Neave will shortly leave his role as Commonwealth Ombudsman. He is a former Chief Ombudsman of the Financial Ombudsman Service, the Australian Banking Industry Ombudsman, Chairperson of the Legal Services Board of Victoria and Vice Chair of the Australian Press Council.

Mr Neave was recognised as a Member of the Order of Australia in June 2005 for service to public administration and to the banking and finance industry.

Commenting on the appointment, Mr Elliott said: “This is a significant new appointment designed to help us more consistently deliver fair and responsible banking to our retail and small business customers.

“Colin’s deep experience in financial services, examining and resolving the most difficult of issues, makes him the ideal person to provide us with frank and independent assessments of the fairness of our products and services. This includes the impact they have on customers, particularly those in vulnerable situations.

“Colin’s initial focus will be to help us listen and to better understand the key retail and small banking issues by speaking to our customers and relevant stakeholders including our regulators and NGOs.

“As a first step Colin will be to help us establish our Remediation Principles so that we have a consistent set of standards we stick to when things do go wrong. He will also conduct a Fairness Review of our core retail deposit and credit products to ensure they continue to operate fairly, including their fees and charges. Our decade old basic banking account, for the most vulnerable, will be part of this review,” said Mr Elliott.

Mr Neave will be based in Melbourne and will commence with ANZ early in 2017.

Federal Court imposes multi-million dollar penalties on ANZ and Macquarie Bank

The ACCC says the Federal Court has imposed multi-million dollar penalties on Australia and New Zealand Banking Group Limited (ANZ) and Macquarie Bank Ltd (Macquarie) for attempted cartel conduct after action by the Australian Competition and Consumer Commission.

Following the filing of joint statements of facts and submissions by the parties, Justice Wigney imposed penalties of:

  • $9 million against ANZ in respect of its admission that it engaged in ten instances of attempted cartel conduct in contravention of the Competition and Consumer Act 2010 (CCA); and
  • $6 million against Macquarie in respect of its admission that it engaged in eight instances of attempted cartel conduct in contravention of the CCA.

The banks were also ordered to contribute to the ACCC’s costs.

“These penalties underline the seriousness of the conduct involved in these proceedings. Two significant Australian banks have admitted that on several occasions their traders communicated with other banks in an attempt to influence the ABS MYR Fixing Rate. This conduct had the potential to undermine the integrity of foreign exchange markets and undermine healthy economic growth,” ACCC Chairman Rod Sims said.

“Australia’s strong cartel laws apply equally across the economy, including in the banking sector.” Mr Sims said.

In his judgment, Justice Wigney stated:

“There could be little doubt that the attempted contraventions … were very serious… The conduct of the traders in question was deliberate and systematic.”

“Attempts by banks and other market participants to fix prices or financial benchmarks in the financial system should be regarded as particularly serious contravening conduct. It is essential that market participants and the public generally have confidence in the integrity and efficacy of the financial system.”

Justice Wigney also noted:  “The Australian public is entitled to expect that Australia’s major corporations act as exemplary corporate citizens wherever in the world they may operate.”

Background

Traders employed by a number of banks in Singapore communicated via online chatrooms about daily submissions to be made to the Association of Banks in Singapore (ABS) in relation to the benchmark rate for the Malaysian ringgit (ABS MYR Fixing Rate).

ABS benchmark rates are used as reference rates for settling NDFs. Non-deliverable currencies are not freely tradeable outside the domestic economy, so a benchmark rate must be set by banks submitting their views on the appropriate rate. That benchmark is used to enable trade in forward contracts.

During the relevant period, the ABS MYR Fixing Rate was derived from submissions made each day by a panel of banks.

Every trading day, each bank on the panel was required to submit a buy and sell rate for USD against the MYR. The ABS rules required that the submissions were made independently and based on the banks’ objective assessment of the market.

During 2011, ANZ and Macquarie traders attempted to make arrangements with other banks to make high or low submissions to the ABS MYR Fixing Rate. The rate would ultimately affect settlement payments for MYR denominated non-deliverable forward contracts (NDFs).

ANZ was a submitting bank for the MYR. Macquarie was not a submitting bank however often initiated discussions between traders and acted as a hub or coordinator between submitting banks. ANZ and Macquarie’s customers included Australian companies.

The ACCC estimates that the annual MYR NDF turnover in Australia was approximately $9 to 10 billion.

Similar conduct has been investigated and sanctioned in other markets.  The Australian Securities and Investments Commission is also engaged in litigation against several Australian banks regarding the setting of interest rate benchmarks.

ANZ Lifts Variable Investment Property Rates

ANZ today announced its variable Residential Investment Property Loan Index Rate would increase by 0.08%pa to 5.60%pa in response to rising funding costs and changing market conditions.

There is no change to ANZ’s standard variable rate for owner-occupier home loans.

Fixed rates remain unchanged for both investors and owner occupiers.

ANZ Group Executive Australia Fred Ohlsson said: “Despite residential investor rates remaining at historic low levels, this was a difficult decision that took into account increases in our funding costs and our regulatory obligation to manage a balanced portfolio.

“There are no changes to our variable rates for owner-occupier home loans. Customers concerned about the long-term direction of interest rates are able to take advantage of our competitive fixed rates that remain unchanged for both investors and owner-occupiers,” Mr Ohlsson said.

ANZ will also increase its Equity Manager Account rate by 0.15%pa to 5.82%pa. All changes are effective 16 December.

Job Ads Higher In November

ANZ says Job advertisements rose 1.7% m/m in November following a 1.0% rise in the previous month. Annual growth in job ads accelerated to 6.1% y/y, up from 5.2% y/y in October. In trend terms, job ads rose 0.5% m/m in November, slightly lower than the 0.7% rise in the previous month.

anz-job-ads-nov-16“The rise in ANZ job ads over the past four months is quite encouraging given the recent softness in the employment data. It is consistent with our view that although the pace of improvement in the labour market has slowed, conditions remain supportive of ongoing recovery.

The RBA has cited the labour market as a key risk to the economic outlook, reflecting concern over the degree of spare capacity given the high rate of underemployment. This spare capacity has the potential to weigh on wage growth and jeopardise the timing of the return of underlying inflation into the 2-3% target band next year. Moreover, the recent soft patch in activity also poses some risk to employment growth in the near term. As such, we expect that the labour market and the weakness in wage growth will be a key topic of discussion at this week’s RBA board meeting.

The strength in job ads recently, however, suggests that moderate economic growth should remain supportive of an ongoing gradual fall in the unemployment rate, given still solid business conditions and low interest rates.”

ANZ has little time for robo-advice

From Financial Standard.

ANZ chief executive Shayne Elliott said the bank won’t be embracing robo-advice any time soon. And opportunities are less in Australia for fintechs.

robo-pic-ii

Speaking at a Reuters Newsmaker event in Sydney yesterday, Elliott told attendees that ANZ’s focus moving forward is on becoming the best bank in the world and increasing its competitive advantage – a strategy he doesn’t think robo-advice could contribute to.

“We have looked into robo-advice, and I do think there is a role for it now and in the future. But the question is whether it’s something we could do better than everybody else, and I’m not convinced. We have done a few trials and there’s a lot of exciting stuff there, but I’m not sure it’s anything that would differentiate us,” Elliott said.

“There are a lot of things we could do, but it doesn’t necessarily mean we should do them. I think there are more meaningful things we should invest in right now.”

Elliott did admit that he is concerned about the threat to the traditional banking system posed by fintech. Though, he doesn’t believe the opportunity for fintechs to thrive is as abundant in Australia due to the efficient nature of the market.

“I worry about fintech just as I worry about any kind of competition. But I do think the opportunities are less in Australia for fintech than in other regions, we don’t have the kind of glaring inefficiencies that you see – even in parts of the United States – that make them a much more attractive place for disruption,” Elliott said.

However, Elliott acknowledged the “really good thinking” occurring in fintech and hinted at a potential partnership in the future.

“We do think that there’s an opportunity for us to possibly work with them. You have to understand that we’ve got something of enormous value, which is a lot of customers that trust ANZ,” Elliott said.

Placing a move into robo-advice on the backburner comes as part of the bank’s decision to downsize, with the recent sale of its branch network across five Asian countries to DBS Bank and the potential sale of its wealth business, and is also part of the institution’s strategy for transforming the business’ culture.

Elliott said that the bank’s conglomerate presence in the past caused a failing in terms of visibility across all aspects of the business, saying that the complex structure of the organisation meant there was no way of really knowing what was going on at all times but ANZ is working towards changing that.

“We’ve made a lot of symbolic changes in terms of making us a more humble organisation, in terms of how senior executives behave, how we interact with people and what we talk about…We’re changing that in two ways, having less things to do – less products, less places, less product groups – and making sure that the way we run them is appropriate,” Elliott said.

“We actually want to be smaller, to be better. And we want to do what we’re good at even better. I figure a smaller bank and a simpler bank will be easier to manage.”