SYDNEY: Australia and New Zealand Banking Group said it plans to sell its car and equipment finance business, which has $6.5 billion worth of outstanding customer loans, in a bid to cut its capital requirements under tough new rules.
ANZ Australia CEO Mark Whelan did not specify an expected price but local media had said the business may fetch about A$2 billion ($1.57 billion).
The sale is part of a broader restructuring aimed at ensuring the bank uses its capital efficiently, Whelan said in a statement.
The bank, Australia's third-largest lender by market capitalisation was widely expected to sell the unit, Esanda, as part of an industry-wide reshuffle of financial loan books to comply with rules aimed at increasing the relative amount of cash lenders keep in reserve.
The announcement also comes a day before the bank is due to report half-yearly earnings which are expected to show profit margins squeezed by a slowing economy and other headwinds facing banks including falling commodity prices.
"They're planning to have their capital requirements reduced as a consequence of selling the business," said BBY analyst Brett Le Mesurier.
"They wouldn't need to raise capital because they wouldn't need as much capital."
In March, the Australian arm of GE Capital sold its consumer finance business to private equity firm KKR & Co LP for A$8.2 billion.
ANZ said it will send an information memorandum to potential bidders later this month. It added that the sale will not include the ANZ commercial broker, commercial asset finance or direct-to-consumer asset finance businesses.
ANZ shares closed down 3 percent in a firmer overall market after rival Westpac Banking Corp missed analyst forecasts with its interim profit result, triggering a selldown across most bank stocks.
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