Path clear for Asian wealth spend-up by ANZ

While most of ANZ's domestic banking businesses are, in practice, starved of capital for growth at present, the management rhetoric around the acquisition of ING's majority stake in the pair's wealth management joint venture may mean that this business is about to become an exception.

The chief rationale for the acquisition, announced on Friday, is that ING was getting in the way of the business being run the way ANZ wanted and resisted chipping in the capital for growth to develop the business the way ANZ wanted.

In practice ANZ's irritation with ING related to the latter's reluctance to stump up the capital for incremental takeover opportunities, such as an opportunity to bid for the Australian life insurance and investment platform business of Aviva.

The joint venture, and ING's attitude, was also an obstacle to ANZ's pursuit of acquisitions in the wealth management sector in Asia.

No doubt ANZ has been seeking to buy out ING's 51 per cent stake in the joint venture for the last two years, since Mike Smith took over as chief executive.

The timing of the buy out of ING appears to be dictated by the Dutch financial group's own workout plan to repay the aid from the Dutch government, with ING one of many European banks given a financial lifeline at the height of the financial crisis a year ago.

ANZ will pay ING €1.1 billion for the stake.

At that valuation - A$1.176 billion in Australian dollars - the agreement uses a valuation lower than that used in ANZ's accounts, leading to a write-down of around $140 million for ANZ on its existing 49 per cent stake.

ANZ takes full control of ING's stake of 51 per cent in ING Australia and ING New Zealand. ANZ has also bought the ING (NZ) Diversified Yield Fund and Regular Income Fund in New Zealand for A$55 million, two funds that caused a degree of reputational damage to ING and ANZ over the last year.

ING's banking business in Australia, ING Direct, is not part of this deal.