ANZ absorbs Esanda

Esanda managing director Moray McDonald said it was business as usual after the finance company's parent, ANZ, announced yesterday that it would absorb the company, transforming it from a wholly owned subsidiary to a division of the bank.

McDonald said the change, which will happen over the next three months, was prompted by the Australian government's decision not to include debentures in its list of guaranteed deposits when it introduced the guarantee scheme last October.

Esanda is a big issuer of debentures. Under its new structure it will stop issuing debentures and replace them with term deposits, issued on its behalf by ANZ.

The term deposits will be supported by the government guarantee on deposits. Esanda stopped issuing debentures following yesterday's announcement.

McDonald said Esanda and ANZ term deposits would have different rate structures. Esanda would tend to pay a premium, particularly for terms of 12 months and longer.

In terms of ANZ's capital position the change is a zero sum game. ANZ's capital adequacy already reflects its ownership of the finance company.

And McDonald said there would be no impact on operations. The brand stays, all staff remain in their current positions and the business model is unaffected, apart from the withdrawal of the debentures.

McDonald said: "We are growing our book, particularly in our motor dealer business where we have seen a couple of competitors get out of the market."

Esanda has made a change to its vehicle buyer finance package, introducing a risk rating system it calls the 'edge program', that allows it to vary the interest rate on the car finance after doing a risk assessment on the borrower.

McDonald said Esanda had picked up share in the market. "A number of the dealer groups that we have wanted to work with have come to us.

"The auto market is doing it tough but our view is that it is a large business and a good business to be in."