ANZ’s $1.5bn Christmas present to shareholders

Following last week’s news of the sale of ANZ’s life insurance business to Zurich, ANZ has made good on its promise to return cash to shareholders with a $1.5 billion share buyback.

The buyback comes as ANZ completes the sale of its 20 per cent stake in Shanghai Rural Commercial Bank, which was originally announced in January 2017.

Announcing the share buyback, which is expected to commence in January 2018, ANZ chief financial officer Michelle Jablko said: “ANZ’s strong capital position combined with the progress made in simplifying our business means we are now in a position to commence returning surplus capital to shareholders while still complying with APRA’s unquestionably strong capital requirements.”

The bank’s core equity tier one (CET1) capital ratios as at 30 September 2017 will remain “broadly unchanged” on a pro forma basis, with the approximately 40 basis point benefit from the sale of Shanghai Rural Commercial Bank offsetting the impact of the buyback, said ANZ in a statement to the ASX.

“ANZ has already purchased approximately $500 million shares on-market to neutralise the effect of the dividend reinvestment program for both the interim and the final 2017 dividends as well as the impact of ANZ’s share-based employee compensation programs,” the statement said.

“The divestment of non-core businesses, including the sale of our Australian life insurance businesses last week, should provide ANZ with flexibility to consider further capital management initiatives in the future.”

The bank pledged to continue to manage its capital “prudently”.

The statement added: “Further capital management initiatives will only be undertaken while ensuring sufficient capital is available to support growth as well as being subject to business conditions and regulatory approval after the actual receipt of the relevant sale proceeds.”