ANZ admits 1MDB scandal hit AmBank share price

ANZ Banking Group's CEO Shayne Elliott has admitted that the 1Malaysia Development Bhd (1MDB) scandal has had an indirect impact on ANZ's shares in AMMB Holdings (AmBank); ANZ is the largest shareholder in AmBank with a 23.78% stake. Yesterday, ANZ said it incurred a AUD 260m ($195m) impairment for its investment in AmBank during the first half ending 31st March 2016.

KUALA LUMPUR (May 4): Australia and New Zealand Banking Group Ltd's (ANZ) chief hinted that 1Malaysia Development Bhd (1MDB) concerns had an indirect impact on ANZ's stake in AMMB Holdings Bhd, The Australian reported today.

AMMB is also known as AmBank.

The Australian quoted ANZ chief executive Shayne Elliott as saying it was unquestionable that 1MDB' debt concerns and the Malaysian economy had a broad-base impact on Malaysian asset valuations. AMMB's share price was no exception, according to him.

“Has the 1MDB and the Malaysian economy and all those situations, impacted the AmBank share price? Unquestionably.”

"It’s impacted the valuation of lots of things in Malaysia, so it will have had an impact. But it’s not a direct response to that,” Elliott was quoted as saying in a press conference yesterday (May 3), during the announcement of ANZ's first-half financials.

ANZ via ANZ Funds Pty Ltd is the largest shareholder in AMMB, with a 23.78% stake.

At Bursa Malaysia today, AMMB shares rose eight sen or 1.8% at 12:30pm to RM4.56 for a market value of RM13.72 billion.

AMMB's current share price compares with the stock's one-year intraday high at RM6.21 seen on May 5, 2015.

In Australia yesterday, Elliott said there was “no 1MDB issue” for the ANZ board to discuss.

“We don’t have an exposure to 1MDB. In terms of our partnership or the minority investment that we have in (AmBank’s holding company) AMMB, all of those stakes get discussed regularly,” he said.

Yesterday, ANZ said it incurred a A$260 million (about RM1.03 billion) impairment for its investment in AMMB during the first half ended March 31, 2016 (1HFY16).

ANZ told the Australian bourse that the AMMB impairment was among reasons for ANZ's weaker 1HFY16 financials, compared to a year earlier. During 1HFY16, ANZ said statutory profit after tax fell to A$2.74 billion, from A$3.51 billion.

At the press conference, Elliott said ANZ had cut its investment value in AMMB by almost 20% or A$260 million.