China is ANZ's New Target with $300M to Invest

Australia's fourth largest bank, ANZ, said on Wednesday that it would invest million more on its China expansion venture. In 2010, ANZ initially invested $395 million which resulted in the opening of six branches in Beijing, Shanghai, Chongquing and Guangzhou.

ANZ Chief Executive Mike Smith said the banks aims to increase its branches in China to 20 in the next five to 10 years. The move is part of ANZ's plan to earn 25 to 30 per cent of its profits outside Australia and New Zealand by 2017.

"ANZ aims to be a super regional bank in the Asia Pacific region, and China is a strategically important market for us," Mr Smith said in a statement.

Besides its current six outlets, ANZ has a 20 per cent stake each in Shanghai Rural Commercial Bank and the Bank of Tianjin.

The ANZ branches in China will start to offer yuan services to Chinese clients, disclosed Charles Li, ANZ's chief executive in China. It would include deposits, lending and wealth management in a bid to make ANZ's operations in the south Asian nation profitable within three years.

Meanwhile, Phil Chronican, ANZ's head of Australian banking, observed that the anti-bank backlash is starting to subside as more borrowers understand better the effect of higher funding costs on mortgage interest rates.

He based his observation on subdued responses after ANZ announced on Friday that it will keep 13 basis points out of the 50-basis points overnight cash rate made May 1 by the Reserve Bank of Australia. That meant ANZ passed on to borrowers only 37 basis points of the rate cut.

"I would never go as far as saying we've won the public debate... but I feel we've moved the debate on and that the commentary over recent weeks is evidence that at least people are now thinking more seriously about what the real issues are," The Australian quoted Mr Chronican.

Recent surveys said that the satisfaction rating of the big 4 fell after it hiked variable mortgage interest rates while the RBA held on to the rates for several months. In March, more borrowers shifted to fixed interest rates because of the volatility of variable interest rates on home mortgages.