anz not expecting loss

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    ANZ not expecting losses from Opes saga

    April 7, 2008 - 11:57AM

    ANZ Banking Group Ltd does not expect any material losses from its exposure to the Opes Prime collapse, bank boss Mike Smith said on Monday.

    ANZ, which is owed about $650 million as one of Opes' secured creditors, has been selling off a portfolio of shares used as security for the loan.

    Mr Smith gave a short update on the Opes issue during a briefing to investors on Monday after the bank revised its estimated first half total provision to $975 million.

    "Although we don't expect any material losses from this, or other broker exposures, I am mindful of the effect on our reputation and on the many Opes clients who are being impacted by the fallout from the actions of Opes Prime," Mr Smith said.

    Mr Smith said ANZ was now undertaking a full review of the risks involved in its securities lending business.

    "That should be ready fairly soon," he said.

    "In the meantime we have to protect our commercial position and our shareholders' interests.

    "We're doing that in a measured and in a careful way, which includes working very closely with regulators to resolve some of the very complex issues which have emerged in ... the last 10 days.

    "It's tough for everybody. When irregularities of this nature occur within a company, there are no winners."

    Mr Smith said ANZ would still be supporting Opes if irregularities had not been discovered inside the company.

    Earlier on Monday, ANZ announced its first half credit provisions would exceed the consensus of market expectations, mainly due to a higher collective provision charge.

    Its collective provisions will include around a $350 million sum set aside for the risks inherent in its institutional portfolio.

    Those provision reflects a small number of downgrades in commercial property and broking industry segments, stronger portfolio growth in institutional and an allowance for secondary impacts of the market turmoil generally, it said.

    Opes specialised in securities lending until it was placed in receivership owing more than $1 billion to secured creditors, primarily ANZ Banking Group Ltd and Merrill Lynch.

    To recoup their loans, the secured creditors started selling shares placed with Opes by as many as 1,200 clients.
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