UPDATE 2-ANZ raises $1.95 bln, seeks RBS Asia assets

By Mette Fraende

SYDNEY, May 27 (Reuters) - Australia and New Zealand Banking Group is raising A$2.5 billion ($1.95 billion) in a share sale, partly to fund a possible purchase of some of Royal Bank of Scotland's Asian assets.

ANZ, Australia's fourth-largest lender, said on Wednesday it had made a non-binding bid for the assets, which RBS recently put up for sale as part of a plan to retreat to its home markets and exit or shrink in up to 36 of the countries where it operates.

HSBC Holdings and Standard Chartered have also expressed interest in buying the assets, which include operations in India, Pakistan, Indonesia and Taiwan and could fetch about $2 billion, sources have told Reuters.

ANZ said it was raising fresh equity through an institutional placement of shares at A$14.40 each, a discount of 7.5 percent to the stock's closing price of A$15.57 on Tuesday.

Analysts described the discount as small but realistic.

'They've timed it very well. The short selling ban is off, and it was a strong market overnight,' said Donald Williams, chief investment officer at Platypus Asset Management.

'It's a skinny discount, but it's enough. I think they'll get away with that...there's a little bit more confidence out there about how the banks' books will play out in the next couple of months. The conditions are more stable,' Williams said.

Australia's top four banks have been forced to raise large amounts of capital in equity and debt in recent months as the global financial crisis puts pressure on their balance sheets.

ANZ said last month it had raised A$18 billion in term funding for 2008/2009, 87 percent of its total requirements.

The bank gave its retail shareholders the chance to buy additional shares, raising up to around A$350 million.

ANZ said some of the money would also be used to bolster its balance sheet, revealing that bad-debt charges were likely to be about 20 percent higher in the second half of its fiscal year than in the first half when charges totalled A$1.44 billion, as additional stress in the commercial segment continued.

ANZ shares are expected to be on a trading halt until Thursday's market open.

Last month, ANZ reported a bigger-than-expected 43 percent drop in half-year cash profit, cut its dividend and forecast tough times ahead as bad debt charges doubled.

Chief Executive Mike Smith said at the time the bank's full-year provisions were likely to exceed the A$2.5 billion forecast it had made earlier.

But it said its tier-one capital ratio would still remain above its target range of 7.5-8 percent, assuming it acquired the RBS assets and raised the required amount of capital.

'They could get RBS assets and still maintain their capital ratio above their goal,' said Peter Vann, head of investment research at Constellation Capital Management.

'There should be positive news here. They are on their way to get their expansion goals in Southeast Asia.'

($1=1.284 Australian Dollar)

(Reporting by Mette Fraende, editing by Mark Bendeich and Dhara Ranasinghe)

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