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ANZ's domination of ING no surprise

Friday, September 25th 2009, 3:55PM 1 Comment

by Philip Macalister

ANZ’s move to acquire the 51% of ING New Zealand it doesn’t already own is no surprise to the market, publisher Philip Macalister says. ING’s Dutch-based parent company has signalled that it wanted to sell assets, meanwhile ANZ, particularly in Australia, needed to pick up speed in the important wealth management market. The move makes ANZ the biggest KiwiSaver provider in New Zealand with just under a quarter of the market. A comprehensive survey published by this week compared the funds under management for all KiwiSaver providers. (Read the survey here.) ING is the most successful overall provider with a total 212,732 members and $523 million (as at March 31) across the four schemes it manages - the ING default scheme, ANZ, National Bank and SIL. Many questioned whether the ING brand had been damaged beyond repair following all the troubles the fund manager had with its CDO-backed Diversified Yield and Regular Income funds. In its announcement ANZ says it has negotiated the right to use the ING brand for 12 months. “The deal today most probably spells the end of the ING brand in New Zealand,” Macalister says. One of the biggest challenges for ANZ will be to win over the independent financial adviser market. Currently ING distributes most of its funds and life insurance via the independent adviser market. ANZ doesn’t deal with this market and will need to learn how to manage it to be successful with ING.
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Comments from our readers

On 26 September 2009 at 8:07 am Independent Observer said:
It is interesting to look at this transaction from a variety of perspectives:

ING: Had no option other than to sell, following significant brand / reputation damage. The market conditions and dominant shareholder meant that there was only ever one purchaser on the other end of this transaction. Whilst NZ is a very minor element of their global distribution, there is no doubt that they have left the door open to return to Australia in better times.

ANZ: Were the only purchaser. ANZ will no doubt quickly absorb ING processes into their existing models as quickly as possible - despite assurances that its "business as normal". Whilst ANZ will be dominant in the wealth management space through this purchase, banks have historically demonstrated an ability to erode value when matching shareholder and stakeholder expectations. The current ING model will have to change - otherwise, why bother purchasing it?

The Adviser: You will continue to receive the same level of service / product offerings from both ANZ & ING for the next 12 months, although will start to notice incremental differences in process, philosophies and people. It is highly likely that the current ING offerings will be changed to increase returns to ANZ shareholders.

The Regulator: I guess that this makes the Regulator's job a bit easier, as it now has one large cheque book to pursue in the event of problems. The flip-side is that this cheque book will also be used for defense, making the Regulator's task more complex and expensive.

The Consumer: Although the theory suggests that the consumer will make rationale decisions, the reality is that apathy and ignorance will preserve a good chunk of the ING assets purchased by ANZ. The bank's aim should be to redirect as much of these assets as possible into lowering their overall cost of money - as offshore money becomes increasingly expensive.

Bottom line: be aware of the medium - longer term impacts of this transaction upon your clients, and ensure that you are not exposed as thing unfold. Be prepared to speculate (and avoid the self-serving propaganda) - it's healthy!
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China Construction Bank Special - 2.65 2.65 2.80
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Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 ▼3.40 ▲3.50 -
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HSBC Premier LVR > 80% - - - -
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ICBC 3.69 2.25 2.35 2.65
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Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
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SBS Bank Special - 2.29 2.29 2.65
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The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
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TSB Special 4.54 2.29 2.49 2.65
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Westpac 4.59 3.09 3.29 3.39
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