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By Swati Pandey
SYDNEY, May 14 (Reuters) - Australia and New Zealand BankingCorp pulled off a major coup on Wednesday by poaching asenior Citigroup executive with extensive experience inAsia, where it has been bolstering its presence in recent years.
Farhan Faruqui's appointment to head up internationalbanking from Hong Kong is the latest in a string of appointmentsby ANZ designed to boost growth in Asia at a time when it isreshuffling its organisational structure and exitingnon-performing investments.
Faruqui's appointment follows that of Sameer Sahwney whobecame the head of global banking for international andinstitutional banking this April. Both report to Andrew Géczywho was appointed CEO of ANZ's international and institutionalbanking late last year.
ANZ first announced its "super regional strategy" in 2007/08to step up income from outside Australia, but madeslower-than-expected progress, missing its own initial five-yeartargets.
The business has since grown, but driving revenues fasterand improving investor returns remain key challenges in ANZ'spush to become a major regional player amid stringent capitalrules and growing competition.
"We have seen returns inching lower in recent periods andthis is a banking market which is well contested. So, certainlythere is a growth-return trade-off," James Ellis, a bankinganalyst at Credit Suisse said.
ANZ's Asia business posted a 40 percent growth in net profitat $455 million in the first half of the year ending inSeptember. Its Asian share of institutional banking has risen to27 percent from 14 percent four years ago.
It expects to see return on equity (ROE) at 16 percent by2016 from 15.5 percent now, raising scepticism from bothinvestors and analysts about its ability to achieve that targetas margins shrink.
In a recent presentation, ANZ said it was focussed ongeographies offering scale and increasing its product mix as itlooks to leverage itself as a trade bank. At home, ANZ also hasa retail presence.
ASIA GROWTH
ANZ exited a partnership in Vietnam in 2012 and may exitstakes in Cambodia and Indonesia as it looks to own 100 percentof the business rather than small stakes to improve investorreturns.
The strategy, which aims to capture booming Asian growth,trade and investment flows, differentiates ANZ from its peers inAustralia, although analysts say it was too soon to compare itwith Standard Chartered, HSBC and Citi -who already derive most of their income from Asia.
Géczy told Reuters that the bank will take advantage ofstrong trade flows and foreign investments into Asia.
"What I aspire to do with the organization structure thatI've created and the appointments that followed on is to deriveon getting delivery of our strategy and to make it come alive,"Géczy said by phone.
ANZ shares have gained almost 13 percent since Géczy tookover in September, better than its local rivals andoutperforming the benchmark index, Citi, StandardChartered and HSBC.
"I think the business is progressing. There is a concernthat it's capital intensive, it requires a lot of capitalsupport, but the last results showed they are doing okay," saidJohn Buonaccorsi, banking analyst with CIMB.
(Editing by Matt Driskill)
