Farhan Faruqui: It’s much more exciting to be at ANZ at this juncture. Citi is in a different stage of development and investment in Asia. They already have a very large business in Asia with a long history in the region.
However, their challenge now is to manage their multiple stakeholders back in the US which require them to be more conservative around growth aspirations overseas, including in Asia.
ANZ benefits from Citi's and other international banks' inability at this time to continue to invest and grow in the region. We are still relatively smaller but have a lot of room to grow - and that makes ANZ a more interesting place to work if your aspiration is to work for an organisation where growth is high on the agenda.
Andrew Cornell: Your new boss, Andrew Géczy, has made a similar point in that there is opportunity for ANZ as some of the more established players in Asian banking restructure or concentrate on regulatory or domestic issues rather than the Asian opportunity. How do you see the environment?
FF: We are extremely well positioned to take advantage of the Asian opportunity - we can be more nimble than our international competitors and while they seek to rationalise geographies and business lines, ANZ is investing in both product capabilities and in growing geographic reach.
AC: There has been some anxiety in the investor base that a growth strategy in Asia doesn’t deliver the returns however.
FF: I want to be careful that we don’t think this is growth on a standalone basis, irrespective of everything else. We simply cannot take our eyes off profitability and returns. We have to deliver responsible growth and I feel we're well positioned to do that - as long as we keep to a client-centric strategy where we can deliver value through our financial and intellectual capital. And we have a growing regional network connecting our clients across multiple trade and investment corridors.
AC: Asia is a vast and complex opportunity though, how do you ensure you have the right discipline, that you are getting the profitability and returns?
FF: We need to ensure we're banking clients who value what we have to offer. We bring a lot to the table for our clients: a strong and growing Asian network, strong industry expertise in sectors such as energy and resources, infrastructure, and agriculture, for example. We also bring to our international clients an incredibly strong domestic Australian franchise, a dominant New Zealand banking presence and an unparalleled Pacific franchise. So the key question is who do we really want to bank? And that’s based on our clients valuing what we offer.
We also need to ensure that we leverage our product platform across lending, capital markets, FX and rates, and transaction banking to ensure our clients benefit from the scale of our platform.
So it’s really looking at making sure we’re banking clients where we have core competence and an ability to differentiate so we can win share of mind with them - and then ensure we deliver on that promise in terms of returns and profitability.
Andrew, all of this goes down to how well we execute. We have a clear strategy and based on my early impressions, we don’t have a talent issue at all. There may be skill gaps we need to fill but we have some exceptional people across our network.
AC: To the extent though that there may be some gaps you want to fill, and obviously you believe in the opportunity here at ANZ, but does ANZ have the profile to attract that talent? Is the super regional strategy really visible in Asia?
FF: Well in 2007 when Mike started the whole super-regional strategy, what ANZ had in Asia was not even a shadow of what it has today. Wehave come a long way in this period. We need to continue to market that as well as the fact we have a clear strategy and plan for the future. Attracting talent to where ANZ's platform in Asia is today is much easier than it probably was seven years ago. To my mind ANZ has made the most gains in Asia over the last few years.
AC: There seems to increasingly be the view from corporate clients – and indeed we heard this when Andrew Géczy hosted a panel with clients in Hong Kong for the Asia Investor Tour – that they want a panel of banks, that they don’t want to be too entrenched with one relationship bank.
FF: Two points on that. One is that the world is getting a lot more specialised. So there is a great deal of value in having multiple banking relationships across the various verticals where the clients are seeking excellence.
The second point is that clients today prefer to diversify their own risk, counterparty risk etc.
But also there is a concern that some of the retrenchment to their home markets by the large global banks can lead to loss of capital and resources dedicated to Asian clients - hence banking with strong regional banking partners such as ANZ is increasingly important
AC: How does ANZ fit into that paradigm?
FF: We are important providers of network for our clients - and in particular we have particular strength in the Pacific geographies where there aren't other banks with our scale or in New Zealand where we have a dominating presence. We need to ensure that we leverage these strengths and gain our clients' confidence to serve them equally in the Asian markets.
Are we selling that Asia network effect as much as we should? I don’t know the answer to that, I would think there is room to improve.
We should also ensure that we are drawing on our unique industry insights in sectors where we have a natural advantage due to our home base.
AC: We often hear about the need to work the network a bit harder, of “monetising” the network, how does that work?
FF: We need everyone across our organisation to be thinking network all the time. Everyone must know the network and the value of our network so that we can connect our clients along the key corridors as effectively and seamlessly as possible - and certainly better than any of our competitors can - we simply need to be the best in this space. It needs to be part of our DNA.
What I mean by that is whether we are providing that intellectual content and that intellectual capital in a manner which allows us to leverage that content for our business? But critically it has to have value for the client. It’s not just having a product offering.
If, for example, there’s anagri player and we have analysis suggesting there is likely to be price action with their particular agri commodity, then we have to have alongside that analysis hedging solutions that we can offer to that client.
Or if there’s an FX view we have, we must have a hedging solution around it. The content in and of itself is great but it has to lead to something – for the customer and for us.
Everybody has to feel that every time we put out a dollar of financial capital and every time we provide intellectual capital, we should know what it is leading to, how can we monetise that and how does the client get a return?
I don’t want the banker to go and say “Sir, I have just brought with me my cash management product expertise, can you please appoint us as your cash management bank and open an account?” That is product selling. But if I go to the client and say we’ve just done a lot of work around your asset and liability exposures and we think you have a substantial risk in terms of your US dollar/Euro mismatch in your trade. And based on our insight is we think the US dollar and Euro are going to trade in a particular manner, and you have this exposure, and our suggestion would be you think about hedging that. We’ll leave that thought with you mister CFO but also here’s a proposal we can give you to provide that hedge. That’s a solution, it’s not selling a product, it’s selling a solution.
AC: What are your immediate plans?
FF: We need to get focused on delivering our network and platform to our clients and make sure that we're banking a set of clients who value what we bring to the table.
We need to ensure we are growing responsibly with them and executing our strategy.