Case Study on International Banking
——Australia and New Zealand Banking Group Limited
Abstract
The purpose of this report is give brief introduction of both of the history and evaluate
ANZ ‘s current situation and its overall strategies in both local and overseas banking
market through our SWOT analysis, which means strength, weakness, opportunities and
threats. There are three goals and objectives in this report. The first goal is to give a
general idea of how ANZ evolve during its business circle. The second goal is to analyze
its current strength, weakness in the Australian local banking market, and then to analyze
its opportunities, threats in both local and overseas market. The third goal is to analyze
ANZ’s based on the references we found.
Keywords: ANZ, banking market, International Banking
1 Introduction
Australia and New Zealand Banking Group Limited also called ANZ, over the years, ANZ has grown to be
one of the largest banks in the world with more than AUS$ 335 billion in asset.
（ headquarters are located
in Melbourne, Australia with offices throughout Australia, Asia, Europe, New Zealand, the Pacific, and the
United States. (Business Asia, 2000) This report will illustrate the its history, and product and services with
current structures, financial performance and the corporate social responsibility[1]. In addition, it also
focuses on ANZ’s strength, weakness, and also its opportunities and threats in the current time and future
period.
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History
As we all know, ANZ’s impressive history stretches back over 150 years and involves dozens of banks. In
the year of 1835, ANZ began in London when the Bank of Australasia was established. In the following
years, the Union Bank of Australia, the English, Scottish and Australian Bank (ES&A) were also
established; and the Bank of Australasia merges with the Union Bank of Australia to form ANZ Bank in
1951.( , 2007, General Information of ANZ)[2]
In 1970, there was the largest merger in Australian banking history, ANZ merged with the ES&A to form
the present organization, and then, it expanded its representative branches all over the world, and acquires
dozens of banks. Most recently, it acquires National Bank of New Zealand. (, 2007) [3]
Organizational Structure of the Bank
Personal Division
Retail Banking:
Manages the metropolitan branch network Australia-wide.
Regional, Rural and Small Business Banking
Provides a full range of consumer, business and agribusiness banking products and services for small
business, regional and rural customers across Australia.
Mortgages Australia
Provides mortgage finance secured by residential real estate in Australia.
Consumer Finance
Provides consumer and commercial credit cards, personal loans as well as merchant payment facilities.
Banking Products
Responsible for ANZ's consumer transaction and savings products
Investment and Insurance
Responsible for ANZ's wealth management products and services including Financial Planning, Insurance
Products, Margin Lending, ANZ Executors & Trustees and ANZ's ING joint venture and E*TRADE
relationship.
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Esanda
Provides vehicle and equipment finance and rental services.
Institutional Banking
Institutional Banking
Institutional Banking provides customised products and financial service solutions to large corporate,
institutional, and government clients.
Corporate Banking
Responsible for relationships with clients with a turnover in excess of $20 million.
Business Banking
A geographically based business providing financial solutions.
Financial Institutions
Provides solutions for banks, insurance companies, fund managers and other financial intermediaries.
Corporate and Structured Financing
Provides complex products and tailored solutions across structured debt, debt capital markets, mergers and
acquisitions, private equity and infrastructure investment.
Markets
Provides specialist services in foreign exchange, capital markets, commodities, structured derivatives, and
interest rate services to organizations throughout the world.
Working Capital
Provides trade finance, cash management, international payments, clearing and custodian services
principally to institutional and corporate customers in Australasia and overseas.
New Zealand Division
ANZ National Bank Provides a full range of banking services for customers through:
ANZ New Zealand
The National Bank
Other Business Unites
Asia Pacific
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Covers ANZ representation in the Asian region and the Pacific region.
International Partnerships
Responsible for developing new and existing partnerships with local banks across Asia that have strong
local market advantage.
Private Bank
Manages the top one percent of the ANZ’s individual client base.
ING Australia
Provides integrated manufacture and distribution of wealth creation, management and protection products
and services aligned to ANZ distribution and the open market
ANZ’s shared services
Operations, Technology and Shared Services.
Operations Technology and Shared Services (OTSS) is ANZ’s core support division. OTSS is responsible
for ANZ’s global information technology solutions and infrastructure, global back office payments
processing and the provision of shared services.
Risk Management
Risk Management is responsible for the organisation’s risk strategies, policies and processes. Risk
Management's distinctive risk management capability enables ANZ business units to meet their
performance, growth and breakout objectives along with delivering a 'no surprises' approach for
management and the market.
Group Financial management
Group Financial Management is responsible for the overall financial management of the ANZ Group
including control of the structure of ANZ's balance sheet, finance management information systems and
performance management.
Internal Audit
Internal Audit is an integral component of ANZ's governance process. Internal Audit provides an
independent and efficient evaluation of the effectiveness of ANZ's risk management and internal controls.
Group Strategic Development
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Group Strategic Development is responsible for the expansion and reshaping of ANZ’s businesses, mergers,
acquisitions and disposals, and overseeing the Group’s strategic cost agenda.
Group People Capital and Breakout
People Capital's mission is to deliver the best opportunities, the best leaders and the best company. It is
responsible for ANZ's strategic human resources function.
Breakout and cultural transformation
Creates and manages initiatives designed to build a high-performance, values-based culture within ANZ.
2 Discussion
Strength
Comparing with other banks in Australia, ANZ has its own merits on service and products.
Firstly, ANZ offers different personalized services to customers. For example, ANZ provides free banking
for six months. As a customer, he can apply a new account in ANZ and not need to pay service fee in the
first six months. It can be clearly seen that this measure can bring more convenience and advantages to
customers. So it is undoubted that this good service can make more customers to select ANZ’s financial
service. Also, another example is that a person who is under 18, over 60 or a student won’t have to pay a
monthly account fee. It is believable that no paying a monthly account fee can bring more convenience to
these customers because these people have no income or less income.
( ) An increasing number of
customers can be attracted by these personalized services and select these services. Therefore, the revenue
of these services in ANZ will increase rapidly. This can bring more profit to ANZ. Meanwhile ANZ can
gain customers’ trust due to these services.
Secondly, ANZ has often developed new financial products such as Designmycard and Visa Gift Card.
Designmucard which was launched in 2005 allowed credit and debit cardholders to choose an image for the
card face.
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(
DDA3DBB4 ) Moreover, Visa Gift Card was launched in 2006. The customer can purchase gifts and send
to his favorite friends in anytime and anywhere through using this card.
(
C932243 ). These new cards which were developed in recent years are used to provide interesting services
to customers, and some teenagers can be attracted by these new products.
Thirdly, ANZ often adopts new technologies to build a safe trade environment in recent years. For example,
ANZ implemented ATM ink-staining technology to deter thieves in 2006. The new technology will stain
case notes with ink when the thief tries to steal cash from ANZ ATM.
(
57BF3D ) This new technology is adopted firstly by ANZ in Australia, and the new technology can help
ANZ to reduce cash stolen risks and protect cash better and improve safety precautions. ANZ bank can
obtain more trust of customers by using this new technology. And this can attract more potential customers
for ANZ.
Fourthly, ANZ focuses on normal Australian clients. It provides a “high-quality, low-cost” financial
planning model which can be cost effective for the bank and small investors. The clients can use less than
$50000 to invest.
(
) ANZ often pays attention on the state of the personal finance. At the same time some small
families can get various investment supports from ANZ.
Fifthly, ANZ provides internet banking service. ANZ internet banking is one of the cheapest banking
options available. Customers can log on their accounts 24 hours a day. It is very convenient for customers.
( )
Weakness
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Although ANZ has some advantages, it also has some shortages.
Firstly, labor force is a serious problem in ANZ. According to Markets Economics Weekly (2000, ),
“ANZ expects a further small decline in employment of 10000 in December in 2000.” The workers’
confidences are influenced by unemployed pressure so that the efficiency of job will be affected.
Secondly, processing mistake is another serious issue in ANZ. ANZ had to refund to customers a total of
$45 million following a major credit card processing mistake in 2006. For ANZ, it is a big loss which can
be avoided.
(
F2595 ) So, how to reduce the processing mistakes is very significant for ANZ.
Thirdly, ANZ has many kinds of charges or fees. For instance, ANZ has charges for the replacement of
cards or PIN, transaction verification, duplicate statement, late payment, cash advance and over the limit
fee ranging from $5 to $25.
(
cusModuleID=17470/overideSkinName= ). So it can be clearly seen that the kinds of
fees or charges of ANZ are many, and customers must pay these fees if these states occur. Therefore, it is
unavoidable that this must result in ANZ will loss its high competition ability and some customers due to
these fees. And it does not benefit for ANZ. So it is very necessary that ANZ must adopt some means to
solve this problem.
Opportunities
The major opportunities are overseas banking market which locates in those developing countries.
Developing countries’ banking markets are potential and attractive markets. That means, we could obtain
new market shares and generate additional profits though high standard banking services. As we know,
most of developing countries haven’t achieved perfect overall banking systems. In this case, local
governments would be pleased to invite those foreign banks to their countries in order to help them build a
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high quality banking system. Chinese banking market is a good example. ANZ has already opened two
branches in Beijing and Shanghai. According the official website of ANZ China, the major services that
ANZ provides now are risk management, which include foreign currency options, interest rate options,
foreign currency swaps, forwards agreements, long term money deposit and so on. Based on those, we can
see that services of ANZ in China are very limited. More and more banking services could be offered in the
near futures.
There are lots of opportunities among personal finance area, . consumer loans. Most banks in developed
countries have small amount of loans available for consumer products which means not require huge
amount of money, for examples, personal computers, TV, furniture, home entertainments stuffs. We could
see those things’ advertisements in every retail stores, zero deposit, and 3 year interest free. These may not
be directly issued by banks, but by some financial companies directly owned by those large banks.
By providing personal finance services, people need to provide their ability of repaying loans, which will
be needed to access their credit rating. Currently, there is such a system in Chinese banking system.
Therefore, if ANZ is the first-mover in this area, the good outcomes are obvious to see.
Overseas bank merge is also one of the most important issues. ANZ has already merged National Bank of
New Zealand and Bank of New Zealand. Furthermore, ANZ is holding % shares of Tianjin City
Commercial Bank. (Mcgregor & Trucker, 2005, ). This kind of activities could be push deeper in
foreign banking markets.
In the local banking market, all Australian banks are now in mature stages which means each bank has their
own customers, people would hardly to switch their accounts to other banks. This is due to the interest rates
among different banks are relevant same because of the interest rate of Australian Reserve Bank. Therefore,
maintain or increase ANZ’s total money deposit in order to make more loans.
Threats
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In overseas banking market, the major threats could be divided into three aspects. Firstly, competitions
from locals banks in foreign countries. Overseas banking system may differ from local banking systems,
which are why most local banks in foreign banking markets have some competitive advantage than those
foreign banks are trying to enter their banking system. ANZ won’t face one local bank in foreign markets
but all of them.
Banking system regulation and political issues are my second concern. Not all countries have stable
political environment, especially in those developing countries. If the political isn’t stable, that would be
very hard to run banking business. Banking system regulation needs our attention as well. For example, the
Chinese banking system still doesn’t allow transfer funds among countries or convert RMB to other
currencies freely, although the government are trying to reduce the barriers of cross countries’ transfer and
free foreign exchange, there are still lots of regulations exist in order to prevent high amount of money
transfer and in order to prevent money laundry and other illegal transferring activities. In this case, it would
be hard for ANZ or other foreign banks to generate funds outside of China or invest those funds generate
from Chinese market to overseas.
Furthermore, in the regulations on foreign banks, the Chinese government emphasized the commitment of
foreign banks to its market, as an important prerequisite for their entry. For example, foreign banks were
required to first establish representative offices, before their application to establish branches. (Lu &
Dewhurst, 2007, ).
Thirdly, just as I mentioned in opportunities part, is the credit rating system or in other words, credit record
checking system. Banks make profits though making loans, if people don’t have the ability to repay interest
and loan that will be a nightmare for banks. The problem is there rarely have a credit rating check system in
most developing countries, that means it’s difficult to know previous credit history for a specified client,
which is extreme important for small amount of loans.
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In the local banking market, there are lots of threats come from foreign banks, such as Citibank, HSBC and
so on. Those banks are just like ANZ is trying to enter their local markets, but now they open branches to
gain shares of Australian banking market. For example, HSBC doesn’t only have Australian customers but
also lots of Chinese customers, this is because lots of tellers in HSBC can speak Chinese, and those
Chinese customers choose HSBC may due to they can not speak English. This is the reason why ANZ
opened a branch in Chinatown, Sydney with 90% of employees speak Chinese. Moreover, ANZ doesn’t
have competitive advantages in internet banking security area while HSBC has already used code generator
devices for providing higher security level.
Figure 1: Financial Performance
In order to show ANZ financial performance in recent years, we have a look at its total shareholder return.
The index combines share price appreciation and dividends paid to show the total return to the shareholder.
This line chart shows the ANZ financial performance on the basis of total shareholder return over five
consecutive years starting from 2001. Generally the trend indicates a steady growth over the period.
Especially prior to 2005, this index was above that of the median of peer group, and in mid 2006, this index
reached a peak.
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Figure 2: ANZ 2007 Interim Profit $2,102 million
The above is the extraction of the latest half-year financial report of Australia and New Zealand Banking
Group Limited. They announced a record profit after tax of $2,102 million for the half year ended 31
March 2007, increased by %. Earnings per share were cents, increased by %.
According to ANZ Chief Executive Officer Mr John McFarlane, that was a good result in a highly
competitive market. It built on seven years of systematic investment in their customers and their people
(ANZ Media Release, 2007). They achieved strong revenue growth. A gap between revenue and expense
growth of % was attributed their good management.
The Personal segment was experiencing a strong growth. ING Australia, Asia and Private Banking were
also performing well. New Zealand Businesses came in with their best underlying result in recent years,
however that was impacted by increased provisions. Institutional Net Profit After Taxes growth was
double-digit, which resulted from net provision recoveries but was weaker in revenue and profit before
provisions.
They continued with investments in the future. Over the previous year, they expanded their business by
adding more than 2000 people, and opened 26 new branches in Australia and New Zealand. They also
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planed expansion in other countries like, Malaysia, China, Guam and Laos. At the same time they managed
to achieve good revenue/expense productivity. There was also a greater focus on efficiency to improve their
overall performance in the future.
Corporate Social Responsibility
As a result of pressure from the appeal of the society, many companies have increasingly paid attention to
corporate social responsibility in recent years; therefore they have to make some contribution to
communities’ interests in various forms. Because the more they consider such kind of responsibility, the
better sustainability they will achieve in a long-term perspective.
Firstly, ANZ puts greater emphasis on responsible lending that is associated with social and environmental
risks. In handling such risks, it involves assessment of clients’ creditability and lending terms etc. Hence,
while they have defined some areas they would not lend to – for example the manufacture of certain types
of armaments – their approach and preference is to work with their clients to help minimize or mitigate
social and environmental impacts and, where appropriate, provide financial support to help clients improve
their performance.
In addition to improving economic growth, ANZ seeks to operate in away that helps reduce social and
environmental impacts associated with their business. ANZ has undertaken such kind of responsibility
through their contribution to the society. For instance, in 2005 ANZ and its affiliated banks based in
Indonesian donated nearly $2 million to the Asia Tsunami disaster appeal (Media Release, 2005)[3]. Take
another example; in 2006 ANZ committed $250,000 dollars to match shareholder charity donations
(Media Release, 2006)[4]. Such contribution they made would improve their reputation in the community.
Moreover, ANZ is always making effort to create a better working environment for their employees. They
continued to develop policies that facilitate flexibility in working condition. ANZ is the first Australian
company to introduce guaranteed part-time work for employee aged 55 and over. This sets a precedent for
their employees to have more options to choose working schedule. Meantime, in late 2005 ANZ was named
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the Leading Organization for the advancement of Women in Australia among organizations with more than
500 employees.
3 Conclusions
We briefly had a look at the history of ANZ, the organization structure, it SWOT analysis, that is strength,
weakness, opportunities and threats, as well its recent financial performance and corporate social
responsibility aspects. Today’s intensively competitive market urges the company to focus on their various
customized services that satisfy different needs, which make the company distinctive and outstanding
among a good many players. They need to improve their products and services with professionalism and
diligence carefully.
With a healthy economic growth, business expansions, like exploiting overseas markets and industrial
merge and acquisitions would help the entity outperform its competitors, like National Bank of Australia
and Commonwealth Bank. They should dedicate effort to build their reputation both locally and
internationally. ANZ should also take into account social environmental impact associated with their
business in addition to economic concerns, since CSR can be viewed as determinant factors for success in
long run perspective. Well-balanced strategies that focus on these three aspects would ensure greater
achievements for ANZ banking group.
4 Recommendations
Strength and weakness
ANZ should continue to keep and develop its strengths in the future. Good service and advanced
technology can help ANZ to gain success. For example, ANZ should keep on providing original services to
normal Australians. Although there are many banks in Australia, ANZ can get more profit due to
personalized services. Furthermore, ANZ should pay attention to produce some new products through
adopting emerging technology so that more and more customers can be attracted.
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Labor force often influences the development of ANZ bank. ANZ should consider how to build a good
relationship with employees; meanwhile how to arrange and manage various jobs reasonably is very
significant. Moreover, reducing processing mistake and extra fee can attract more customers to choose
ANZ accounts.
Opportunities and Threats
In order to provide personal finance services include consumer loans, ANZ could open some subsidiaries
companies that provide personal finance services. Not only providing consumer loans but also providing
personal financial planning and advises. More banking based service should be provided, not only risk
management, such as long term deposit, home loans, commercial loans and credit card services.
Help developing countries, like China’s banking system, build a credit checking system, and gain first
mover advantage in this particular area. Continuing merge those banks or hold part of their assets with less
banking system regulations, some of banks can not be merged or holding part of their asset due to some
political regulations.
Provide some more human-orientated services in order to gain or maintain current market shares in local
banking market. For examples, reduce the queuing time for customers, reduce the form filling process
when customers go to a branch. Improving call center efficient, make customers solve their emergency
problem as soon as possible rather than spend 20 minutes on the phone. Improving internet banking
security from both bank’s perspective and customer perspective
Reference
[1] “ANZ changes focus in Asia - Brief Article Business Asia. Jan 28, 2000. . Available:
Accessed at Aug. 4, 2007
[2] , 2007, General Information of ANZ [online], Available:
accessed at Aug. 4, 2007
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[3] ANZ Media Release, 2005, ANZ, staff and affiliates’ donations to Asia Tsunami Disaster Appeals reach $
million, Accessed at 05 Aug 2007
[4] ANZ Media Release, 2006, ANZ commits $250,000 to match shareholder charity donation, Accessed at 05 Aug
2007
