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ANZ in Asia

'To achieve growth we need to engage ourselves much more significantly with growth markets such as Asia.'

Sir Dryden Spring, Chairman, ANZ New Zealand

ANZ New Zealand Annual Review 2010

Although many foreign companies are established in New Zealand, only a small number of non-New Zealand and Australian banks operate here. While overseas companies are generally happy to use New Zealand’s local banks, the same does not tend to hold true for New Zealand companies establishing themselves overseas. This is generally related to the suitability of local banks to meet the needs of a foreign company. With many Asian countries having banking systems that are not as developed as New Zealand, an opportunity has existed for banks such as ANZ to enter Asian markets and offer a package of sophisticated banking services that local banks have not been able to easily match.

ANZ in Asia - money machine.

These companies are likely to be familiar with a bank like ANZ and have the need for more sophisticated products and require the ability to leverage a relationship. Over time, larger local companies may also wish to use the services of banks such as ANZ, particularly if a local Asian company is looking to do business offshore and local banks do not have the capability to offer products overseas.

While the banking industry in countries such as Hong Kong and Singapore may be equal in standard to those in New Zealand, local banks in many other Asian countries still offer banking propositions below that which would be expected by New Zealand customers and companies. Often there are more complex issues around the opening of accounts, requirements for increased documentation, delays in making payments, lack of internet banking options and language barriers, which make using a foreign bank a more appealing prospect.

Globalisation has also meant that many companies within these countries are no longer willing to accept a poor bank offering and this has also created an opening for foreign banks such as ANZ to grow and flourish.

ANZ bus signage in Singapore.

Banks such as ANZ are often willing to offer a corporate a loan on the basis of a company’s cash flow, whereas a local bank would almost certainly require the same loan to be backed by security in the form of property.

A cash flow loan reflects the fact that a bank such as ANZ has the ability and confidence in its own analytical skill to look at the way the company runs their business and be assured that the cash flow can repay the debt. In contrast, a local bank in a developing country would not tend to have the analytical skill, financial models, or confidence in its own managerial ability to know how to interpret the data in such a way as to give it confidence in the cash flow capability of a company.

The challenge for banks in the future is what to do when local competitors get into a position where they are increasingly able to replicate the services and products offered by foreign banks. This has happened in Singapore and Hong Kong as they have matured and developed and their local banks have become as good as those from overseas. This has also happened in New Zealand as the number of overseas banks operating in New Zealand has fallen sharply because they no longer offer many advantages over local banks. This is a challenge that non-local banks have always faced.

Read more about ANZ's journey:

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