ANZ wants cheaper China entre
"I have always been interested in assets in this part of the world and Hong Kong obviously is an attractive market, but I feel they are overpriced," he said.
"I look at Hong Kong as very much a stepping stone into China. Therefore, anything you look for has to have the strategic next step in terms of your expansion into the Chinese mainland."
The ANZ boss is trying to double the contribution from his bank's businesses outside Australia and New Zealand to as much as 30 per cent of profit by 2017.
His largest transaction since becoming chief executive in 2007 was $550 million for Royal Bank of Scotland's businesses in Singapore, Taiwan, Indonesia, Hong Kong, the Philippines and Vietnam in 2009.
His bank was among those interested in buying Hong Kong's Wing Hang Bank, it was reported last month. It was also among five bidders for Chong Hing Bank, the Oriental Daily reported.
Speaking in Hong Kong, Mr Smith declined to confirm bids for the two banks. Wing Hang trades for 1.7 times its corporate net worth, while Chong Hing is valued at 1.9 times book value, according to data compiled by Bloomberg.
The more profitable Wing Hang may fetch as much as three times book value.
"I am always looking at various opportunities but, right now, I think it is all too expensive," Mr Smith said. "Two times book is ridiculous at these times"
He said in 2008 that paying more than three times book value for Wing Lung Bank was "crazy". The next day, China Merchants Bank beat ANZ for Wing Lung in a deal that valued it at that level.
ANZ expected to get a bank license next year in Thailand, the only major Asian market it didn't operate in.
Frequently Asked Questions about this Article…
ANZ chief executive Michael Smith says Hong Kong is an attractive market but takeover targets there are currently too expensive. He views Hong Kong largely as a stepping stone into mainland China, so any takeover must make strategic sense for expansion into China.
The article reports ANZ was among those interested in Hong Kong's Wing Hang Bank and was also named among five bidders for Chong Hing Bank. Mr Smith declined to confirm whether ANZ had lodged bids for either bank.
According to Bloomberg data cited in the article, Wing Hang trades at about 1.7 times its corporate net worth and Chong Hing is valued at roughly 1.9 times book value. The more profitable Wing Hang could potentially fetch as much as three times book value.
Mr Smith has publicly criticised paying very high multiples, saying in the article that "two times book is ridiculous at these times" and previously calling paying more than three times book for Wing Lung Bank "crazy." That reflects ANZ's caution about overpaying on valuations.
The article notes ANZ's largest transaction since Mr Smith became CEO was a A$550 million purchase in 2009 of Royal Bank of Scotland businesses across Singapore, Taiwan, Indonesia, Hong Kong, the Philippines and Vietnam.
ANZ is aiming to double the contribution from its businesses outside Australia and New Zealand to as much as 30% of group profit by 2017, according to the article.
Yes. The article mentions ANZ was beaten by China Merchants Bank for Wing Lung Bank in 2008 at a valuation that Mr Smith had described as "crazy" for being above three times book value.
The article reports ANZ expected to obtain a bank licence in Thailand next year, which would be the only major Asian market it did not yet operate in.
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