ANZ's shifty Opes spin
April 7, 2008
Dear Mayne Report subscribers,
This is just a brief update to alert you about ANZ's attempt to pull off an amazing PR shifty this morning.
At 9.46am, ANZ dropped this two page update increasing its general provision by $350 million. A conference call was scheduled for 10.45am, but 10 minutes after it started they dropped this extraordinary statement about its vast number of newly inherited substantial shareholdings courtesy of Opes Prime.
Naturally, the ever-compliant analysts barely touched on Opes, let alone the bank's blatant breaches of the disclosure rules in delaying revealing all these shareholdings.
Even after liquidating about $300 million worth of shares – the exact details of which remain secret - ANZ has now disclosed it owns more than 5% of a staggering 94 different securities, including dogs such as John Elliott's old Waterwheel Holdings.
ANZ shares deservedly tanked by more than 5% this morning as the market focuses on the broader update and bad debt problems. However, I reckon this Opes fiasco will end up costing it more than $100 million once the dust has settled.
Former ANZ CEO John McFarlane popped up as a substantial shareholder in James Packer's Ellerston Gems hedge fund business. It was seen as a statement of support to one of ANZ's most important customers.
Andrew Forrest is now Australia's richest man and ANZ is out there selling up two of his closest backers, Fortescue chairman Herb Elliott and chief operating officer Graham Rowley, as The Australian reported on Saturday. ANZ's business in Western Australia is going to suffer a huge backlash as it causes absolute chaos across the smaller cap resources sector.
As the wholesale provider of loans to 1200 different Opes clients, the bank also had a responsibility to ensure everything remained above board.
Banking analysts from UBS, Morgan Stanley, Merrill Lynch, Macquarie and Deutsche Bank all asked questions during today's briefing but it was only Matthew Davidson from Merrills who touched on the Opes Prime collapse.
Merrills, of course, has largely finished liquidating its $500 million share portfolio previously owned by Opes clients but Davidson very gently inquired as to whether CEO Mike Smith expected any small business clients would shun the bank.
“No, I don't,” the formal Englishman replied rather dismissively, before dropping out that senior ANZ executive Peter Hobson is doing a formal review of the bank's exposures to the securities lending business.
Given that Opes has triggered ANZ's greatest PR shellacking since it teetered close to collapse in 1992, the bank was clearly expecting far more questions on Opes from the analyst community.
Alas, it was investors relations boss Stephen Higgins who asked his boss an Opes Dorothy Dixer after the formal questions had been finished and Mike Smith's response can be summarised as follows:
Can't say much because it is all before the courts but we'd still be backing Opes but for the “irregularities”. The review of securities lending will be finished “fairly soon”. The bank is acting in a “measured and careful way” and is working closely with a range of regulators on what are very complex issues. It's tough for everyone. There are no winners when irregularities happens, but we are mindful of the impact of all this on our reputation.
In other words, Opes CEO Laurie Emini is getting the blame for everything. ASIC and the ANZ appointed receivers from Deloittes are also adopting this "blame it all on Laurie" strategy but I doubt it will work.
If Fairfax' Michael West is right about these two ANZ executive being sent on gardening leave due to their own margin loans from Opes, the bank might find itself with a much bigger problem.
Bankers being generous to a client and slow to detect irregularities due to their own personal financial position is not a good look.
So far, the media is still focusing on the broader ANZ announcement. I reckon this list of substantial shareholdings and ANZ's spin tactics will become a major issue within 24 hours.
That's all for now.
Do ya Best, Stephen Mayne
This is just a brief update to alert you about ANZ's attempt to pull off an amazing PR shifty this morning.
At 9.46am, ANZ dropped this two page update increasing its general provision by $350 million. A conference call was scheduled for 10.45am, but 10 minutes after it started they dropped this extraordinary statement about its vast number of newly inherited substantial shareholdings courtesy of Opes Prime.
Naturally, the ever-compliant analysts barely touched on Opes, let alone the bank's blatant breaches of the disclosure rules in delaying revealing all these shareholdings.
Even after liquidating about $300 million worth of shares – the exact details of which remain secret - ANZ has now disclosed it owns more than 5% of a staggering 94 different securities, including dogs such as John Elliott's old Waterwheel Holdings.
ANZ shares deservedly tanked by more than 5% this morning as the market focuses on the broader update and bad debt problems. However, I reckon this Opes fiasco will end up costing it more than $100 million once the dust has settled.
Former ANZ CEO John McFarlane popped up as a substantial shareholder in James Packer's Ellerston Gems hedge fund business. It was seen as a statement of support to one of ANZ's most important customers.
Andrew Forrest is now Australia's richest man and ANZ is out there selling up two of his closest backers, Fortescue chairman Herb Elliott and chief operating officer Graham Rowley, as The Australian reported on Saturday. ANZ's business in Western Australia is going to suffer a huge backlash as it causes absolute chaos across the smaller cap resources sector.
As the wholesale provider of loans to 1200 different Opes clients, the bank also had a responsibility to ensure everything remained above board.
Banking analysts from UBS, Morgan Stanley, Merrill Lynch, Macquarie and Deutsche Bank all asked questions during today's briefing but it was only Matthew Davidson from Merrills who touched on the Opes Prime collapse.
Merrills, of course, has largely finished liquidating its $500 million share portfolio previously owned by Opes clients but Davidson very gently inquired as to whether CEO Mike Smith expected any small business clients would shun the bank.
“No, I don't,” the formal Englishman replied rather dismissively, before dropping out that senior ANZ executive Peter Hobson is doing a formal review of the bank's exposures to the securities lending business.
Given that Opes has triggered ANZ's greatest PR shellacking since it teetered close to collapse in 1992, the bank was clearly expecting far more questions on Opes from the analyst community.
Alas, it was investors relations boss Stephen Higgins who asked his boss an Opes Dorothy Dixer after the formal questions had been finished and Mike Smith's response can be summarised as follows:
Can't say much because it is all before the courts but we'd still be backing Opes but for the “irregularities”. The review of securities lending will be finished “fairly soon”. The bank is acting in a “measured and careful way” and is working closely with a range of regulators on what are very complex issues. It's tough for everyone. There are no winners when irregularities happens, but we are mindful of the impact of all this on our reputation.
In other words, Opes CEO Laurie Emini is getting the blame for everything. ASIC and the ANZ appointed receivers from Deloittes are also adopting this "blame it all on Laurie" strategy but I doubt it will work.
If Fairfax' Michael West is right about these two ANZ executive being sent on gardening leave due to their own margin loans from Opes, the bank might find itself with a much bigger problem.
Bankers being generous to a client and slow to detect irregularities due to their own personal financial position is not a good look.
So far, the media is still focusing on the broader ANZ announcement. I reckon this list of substantial shareholdings and ANZ's spin tactics will become a major issue within 24 hours.
That's all for now.
Do ya Best, Stephen Mayne