Ann: ANZ CPS2 Margin Announcement , page-10

Timeto, welcome.

Casilios. Valid point. AXA's Asian Business is worth around $7.3Bn. They would need to issue at least $1.7Bn to consider paying cash for it, but, in reality, would need much more. Circa $2.7Bn would be my rough guess:P.

But yes, perhaps an offer of ANZ shares + $4Bn in cash could come for it.

Okay, I admit that. However, such an offer would value AXA's Asian businesses at P/E multiple of 19.0. Probably not what Mike SMith had in mind when he said he wanted cheap acquisitons...

AXA's Aust and NZ business would cost around $4.2Bn... which IMHO will come *close* to the stage where more capital would be required...if more acquisitions were to occur. But, again, a PE ratio of 16, not particularly 'asian assets' and not cheap, makes me think Mike Smith isn't going for these.

Investor,
How do you know they received applications for $2.7Bn?

Assuming you are right, and, $2.7Bn is the 'private' demand for these (seems a touch high......?)... and, then add the general public demand, and ANZ shareholders demand.... and you8 are looking at a MINIMUM $3.2Bn. Why would they receive applications for $3.2Bn, accept $1.7Bn? Why not change the interest margin to something appropriate, say, 2.8%, save tens of millions of dollars, and make the applications closer to $1.7Bn?

They haven't issued $1.7Bn.

CBAPA was a 'bigger' issue (well, bigger than 1.7Bn)... and had a 3.4% margin, and listed at a 2.5% premium. CBA is also considered a 'safer' bank, for what it's worth. 3% above listing is optimistic, but, when credit market returns perhaps, just perhaps, we'll see closer to 10% above face.

WBC/NAB, not sure. I don't know enough about them.

"may be a cleaver strategy going forward if world markets have another financial shock and access to credit falls. "
Yes. It will have been a masterstroke (albeit, not perfect, as it was too expensive).... if we get GFC Mark II. I just don't beleive that will happen.

"Whilst 3.10% is high on a relative basis it is pretty low on a risk adjusted basis as the term is 7 years."
Hm, 3.1% above BBSW for ANZ is the appropriate risk? MacqBank has done 1.7%, NAB 1.25, Westpac 2.4, Westpac 1.0, Woolworths 1.1, ANZCPS1 2.5, Adelaide Bank 0.75, Bendigo Bank 1.75, BBI 1.15%!, BOQ 2%, Suncorp 0.75%, Elders at 2.2%!, CBA 1.05%, CBA 1.05%, Dexus Rents 1.3%, Fairfax 1.55%, Nurfarm 1.9%, etc, etc, etc. Is 3.1% really appropriate risk? Or is it only 3.1% because credit markets are still tight and ANZ want to be able to say it's been oversubscribed and want to accept more than they originally have said? I really can't agree that ANZ is 3.1% above BBSW risky.

"If they are about to make large acquisitions I would prefer them to do it using these types of funds."
If they are, I'd prefer they used internal capital, as that's much cheaper! I admit they should issue hybrids before needing capital... but, I do declare that they should issue hybrids SHORTLY before needing them.

This will lift them to a T1 ratio of 10%. From memory all of the other Big 4 banks are <9%. It's a ridiculous amount of capital. Even 9% is historically high.