“Above all, you have to be patient. It took us two years to get into India.”Alex Thursby, CEO,
ANZ Asia-Pacific, Europe and America
Since 2008, ANZ has invested heavily in establishing a significant onshore presence and network model across five franchise markets: Greater China (including mainland China, Taiwan and Hong Kong), India, Indonesia, the greater Mekong and Malaysia. As part of its ‘super-regional’ strategy, the bank is looking to grow the region’s contribution to group profit from an existing 12% to 20% by 2012.
Alex Thursby is the architect of ANZ’s ambitious play to become an Asia Pacific heavyweight. He has been an Asian banker for 20 years.
What progress have you made in Asia since 2008?
We’re now a top four foreign bank in Indonesia, with ANZ Tower in the central business district of Jakarta and 39% brand recognition. We also have the largest foreign bank franchise in greater Mekong.
Having started with two branches in mainland China, we have branch networks in the top four cities, a rural branch and a full franchise in Taiwan. We’re also one of only four foreign banks permitted to trade gold in the mainland China market.
Having received final approval for a foreign bank licence in India, one of our next moves will be to establish a foreign bank branch in Mumbai.
In the same time frame, our regional business hubs of Singapore and Hong Kong have gone from serving a handful of customers and operating an ex-pat focused private bank, to having a full banking licence in both hubs, offering a deep onshore institutional capability and full retail wealth, private bank and commercial businesses.
Has the pace of growth surprised you?
We’re further ahead than even I expected — and I’m pretty aggressive.
What advice do you have for new entrants?
You have to question your Australian business models and methods.
Some pieces of your business model will translate — some of it won’t. For ANZ, our credit card business worked, pretty much as is, but if we’d gone in with our mass market retail model, we’d have failed.
One of the major differences in Asia for us is that the wallets in the retail space are hierarchical, rather than egalitarian. In Asia, the market is very top heavy. For example, in Indonesia, 1.9% of the population holds 65% of the deposit base. So, for a new entrant trying to build organically, you don’t have to put down 500 branches. You only need 25 in Indonesia, as long as you’re very strategic about where you put them.
There’s also a difference in product focus. In Asia, our model is built around wealth management products and deposits, not around asset products. Deposits will always exceed mortgages in Asia, because of the huge saving surpluses here. There’s no social security; people are very active about managing their money and savings, and they look to banks for that, not wealth advisors.
And people are happy to multi-bank in this segment, so it’s a place we can compete. The barriers to entry are less, the cost to market is less and we can bring our customers the best in the world. We have 300 wealth products.
What have been the key success factors for ANZ?
Progress has hinged on driving our organic growth strategy hard, waiting for the right acquisitions and proactively attracting and developing high calibre senior people.
You must have an organic strategy — it forces you to be disciplined about acquisitions. We have three strict criteria: the business has to be strategically significant for ANZ; it must create shareholder value in the medium term, either through an attractive purchase price or growth prospects; and it must be possible to smoothly integrate the acquisition.
If you can’t tick all those boxes, then don’t do it. Start to build while you’re waiting for the right opportunity to come along.
Why did your Royal Bank of Scotland (RBS) acquisition tick the boxes?
It gave us businesses in six markets, aligned with the bank’s strategy, and the potential to generate profit by 2012. It was a perfect fit, giving us retail, wealth and commercial businesses in Taiwan, Singapore, Indonesia and Hong Kong and Institutional businesses in Taiwan, the Philippines and Vietnam.
We didn’t take up the RBS Indian and Chinese operations. The Chinese business wasn’t appropriate and the India operations lent heavily towards the mass market, which would have made restructuring too hard.
You’ve also taken up four minority investments, for example Indonesia’s mid-sized Panin Bank. What are the advantages of partnerships like this?
Panin offers us a double play in a high growth, high return sector. Like all of our partnerships, it allows us to take a longer term play.
For example, when the Indonesian market becomes mass-affluent, scale will be more critical. At that point, Panin’s 600,000 customers will give us a fast-start to reach the mass market.
Has it been easy to build the ANZ brand against local competition?
Our AA rating during the global financial crisis really helped. Right now, we’re building differentiation on trust and returning to being a banker. We’ve learnt not to push product. You have to know your clients in this market.
Our client model is with a Relationship Manager at the centre, assisted by product experts in wealth and insurance.
What qualities did you look for when assembling your senior leadership team?
The common denominators are: extensive Asian experience, an entrepreneurial approach and the ‘executional paranoia’ that’s essential for success in the region. Other than that, they couldn’t be more diverse. We have ten different nationalities, several women and four ivy-league graduates.
We benefitted from the global financial crisis doldrums. We were able to pull great people out of great organisations with the promise of aggressive business development opportunities.
How are you developing your future leadership talent?
We have a program to educate our best Australian and New Zealand staff and take them offshore. They need the right focus, demeanour and energy levels. You’ve got to look long-term and develop people coming through the organisation — people who want to internationalise.
Do you speak any Asian languages?
I speak Indonesian, but no Mandarin. It’s not a problem. You don’t have to have the language, but you do need to be instinctive about the culture and understand how things are done in the business world.
How important are relationships to building business in Asia?
You have to create the relationships. You can’t sit in your office in Melbourne. You’ve got to talk to business, regulatory and political leaders so you can understand and go through the process. It’s not just about getting in with the governor. The guy at the top will listen and take advice from the guy two or three levels down, so you have to be talking to them as well.”
Above all, you have to be patient. It took us two years to get into India.
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