news keeps getting worse for anz

News keeps getting worse for ANZ
May 20, 2008 SMH article

This time a New Zealand offshoot is taxing the bank, its latest accounts reveal.

SETBACKS tend to come in threes, so perhaps it's no surprise that ANZ Bank should be find itself labouring under yet another financial dead weight.

After an increase of almost $1 billion in half-year provisions caused by soaring bad debts - this is on top of the Opes Prime fiasco - comes updated news of a tax problem faced by the bank's New Zealand subsidiary, National Bank.

The bank has been at odds with the tax authorities over various structured finance deals dating back over a five-year period from 2005.

The National's half-year accounts to the end of March, which were filed with the ASX yesterday, show that New Zealand's Inland Revenue Department has widened its inquiry to cover other deals undertaken by the local bank.

ANZ puts the maximum tax liability of these transactions at $NZ365 million ($296 million), or $NZ523 million with interest.

If ANZ ends up with the whole bill, it will be able to offload $NZ99 million (or $NZ147 million with interest) to the British bank Lloyds TSB, from which it bought the group just over four years ago.

But that will still leave it with a potential liability of $NZ266 million - or $NZ376 million if you count in the added tax.

The dispute is still at an early stage and ANZ emphasises that there is no liability as yet.