ANZ intends to raise $3 billion in order to meet additional capital requirements recently set out by the Australian Prudential Regulation Authority (APRA).
The bank has announced a fully underwritten institutional share placement to raise $2.5 billion and a share purchase plan (SPP) to raise $500 million.
ANZ chief financial officer Shayne Elliott said: “ANZ is currently well capitalised with a range of options available to increase capital in response to future regulatory changes.”
"Recent announcements by APRA have provided greater certainty around the timing and quantum of capital changes, particularly in relation to Australian mortgages.
“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 Plan.
“This capital raising will supplement our organic capital generation since June 2015 and allow ANZ to achieve a Common Equity Tier One (CET1) 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,” he said.
According to the institution, on a 30 June 2015 pro-forma basis, the share placement will add approximately 65 basis points to ANZ's CET1 Capital Ratio increasing it to 9.2 per cent.
If $500 million is raised under the SPP, on the same pro-forma basis, it will add an additional 13 basis points and increase the CET1 Capital Ratio to 9.3 per cent.
APRA’s capital adequacy changes will see an increase in average credit risk weights for major bank Australian portfolios from 16 per cent to 25 per cent, taking effect from 1 July 2016.