ANZ's capital position is already the strongest of the majors but by selling its stakes in Asian banks the lender could boost its tier one capital ratio by 70 basis points or $2.9 billion.
That's the view of Morgan Stanley on Tuesday following reports that ANZ was close to stitching up a deal to sell its 23.8 per cent stake in AMMB Holdings Bhd to a Malaysian retirement fund.
The analyst's calculation comes on the eve of the prudential regulator's long-awaited report on new bank capital requirements, expected tomorrow.
Morgan Stanley’s Richard Wiles has calculated that an AmBank sale at book value would release 30 basis points of capital, while PT Bank Pan Indonesia would unlock 25 basis points and Bank of Tianjin in China a further 17 basis points.
“All else equal, this (the sales) would be 1 per cent dilutive to 2018 earnings per share but it (ANZ) could neutralise the EPS dilution via a buy back,” Wiles said.
“What's more, selling the AMMB stake makes financial sense for ANZ given a 9 per cent return on equity on the stake versus 12 per cent for the group.”
The banking analyst also said ANZ could release up to 80 basis points of common equity tier one capital from a sale of the lender’s Life business and up to 160 basis points should ANZ offload the whole of Wealth.
The Morgan Stanley client note comes as ANZ inches closer to the sale of its 12 per cent holding in China's Bank of Tianjin.
This is consistent with ANZ chief Shayne Elliot's comments at the first-half result briefing that the AMMB and PT Bank stakes are on the block.