ANZ NZ is raising $250m to meet the Reserve Bank‘s tougher demands. Picture / File
ANZ Bank New Zealand is raising $250m to shore up its balance sheet to meet the Reserve Bank’s tighter capital requirements.
The bank offers perpetual preferred shares (PPS) – stocks with bond-like characteristics – New Zealand retail and institutional investors.
The shares will constitute additional Tier 1 capital for ANZ’s regulatory requirements, ANZ said.
Hamish Pepper, fixed income and currency strategist at Harbor Asset Management, said wholesale interest rate markets – domestically and globally – were increasingly becoming the preferred choice for companies to raise funds. .
“The revealed preference we’ve seen from banks this year has been to pull a bit more leverage from the wholesale market,” he said.
The ANZ preferred shares will not have a fixed term and will remain in issue indefinitely if not redeemed by the bank.
If certain conditions are met, ANZ may redeem shares on July 18, 2028 and on each scheduled quarterly distribution payment date after that date.
The offer is expected to close on July 7.
The indicative emission margin for the PPS is 3.25 percent to 3.45 percent per annum.
There is no public pool for the offering, with the entire PPS reserved for clients of co-leads, NZX participants and other licensed financial intermediaries.
ANZ said the offering will raise additional Tier 1 capital to help ANZ meet its regulatory capital requirements and manage its capital position.
Proceeds will also be used for general ANZ corporate purposes.
From this month, registered banks registered locally in New Zealand must comply with the Reserve Bank’s minimum capital ratios, which are calculated as the amount of capital that must be held against risk-weighted exposures. risks.
Tier 1 capital is the base capital of a bank and protects it against unexpected financial losses.
It is made up of Tier 1 Tier 1 capital, considered the highest quality capital, and includes retained earnings – the money a bank keeps aside to make a profit and the investment of shareholders or ordinary shares.
It also includes additional capital consisting of preferred stock, although this is not considered as good as common stock.