The bank has announced a fully underwritten institutional share placement to raise A$2.5 billion ($1.83 billion), followed by an offer to ANZ’s eligible shareholders to buy a share purchase plan to raise around A$500 million.

The share purchase plan is not being underwritten, said yesterday.
    
The capital-raising will enable the bank to more quickly and efficiently meet added requirements recently announced by the Australian Prudential Regulation Authority (APRA), in particular the increase in average credit risk weights for major bank Australian mortgage portfolios to 25 per cent, taking effect from 1 July 2016.

The institutional share placement has been fully underwritten by Citigroup Global Markets Australia, Deutsche Bank and JP Morgan.

Trading in ANZ’s shares was halted, and was due to resume today.

“Given current market conditions, APRA’s compressed implementation timetable for the mortgage risk weight changes and the amount of capital to be raised, we believe a placement on these terms provides more certainty for shareholders than other methods available such as consecutive underwritten dividend reinvestment plans,” Shayne Elliott, the bank’s chief financial officer, said.

“This capital raising will supplement our organic capital generation since June 2015 and allow ANZ to achieve a common equity tier one capital ratio above 9 per cent following the introduction of APRA’s revised risk weightings next year. We expect that this will position our CET1 capital ratio in the top quartile of international banks on an internationally harmonised basis,” Elliott said.

(The CET1 capital ratio is a key measure of a bank’s financial strength; it measures the amount of core bank capital against its total of risk-weighted assets.)

Ahead of a trading statement on 18 August, ANZ said that for the nine month period to 30 June 2015, its cash profit was A$5.4 billion, an increase of 4.3 per cent on the same period in 2014.

A few days earlier, this publication reported the latest in a line of exclusives about senior moves at the firm's private banking arm. See here.