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Austin, TX (ZPRYME NEWS) – 04/15/08 - For one reason or another the Australian and New Zealand Banking Group (ANZ) incurred bad debts higher than earlier estimated. The Australian Business stated that, “The bank now has $975 million set aside to cover bad debts for the first half of the year, compared with its earlier estimates of $567 million for the full year.” This year’s bad debt is high in comparison with last year’s debt. The World Today stated, “That's up more than 70 percent from this time last year.”

The ripple effect of bad international transactions, lending, investment and global turmoil caused much of the increase in bad debt. The effects of globalization and close interconnectedness between countries can be seen from this event. The Australian Business quoting Roger Montgomery, the chairman of Clime Capital, stated,” It’s very hard for the Australian banks to remain completely immune to the credit crunch in the US." According to News quoting ANZ boss Mike Smith, "As turmoil in global markets and the slowing of the US economy plays out and the Australian economy slows due to tighter monetary policy and credit conditions, there are likely to be flow-on effects for the commercial portfolios." Another possibility for the increase in bad debt is the Opes Prime controversy. Opes Prime is a stock brokering and asset management company that has ANZ as its prime backer. ABC News stated that,” Opes Prime investors have launched a class action against the company, its administrators and key backer ANZ. They are disputing the ownership of shares bought through an Opes Prime margin lending scheme. Justice Ray Finkelstein ruled it would be wrong to stop ANZ selling shares acquired through Opes Prime.” There are no substantial facts and evidences which would point the Opes Prime as the culprit of the bad debt. The Australian Business quoting Mr. Smith about his comments on the Opes controversy, “The bank's image had been damaged over its dealings with the collapsed Melbourne stockbroker.”

With the estimated $975 million in revenue ANZ should not complain. HSBC is suffering a higher loss according to Money Week, “The group warned on profits last week, reporting that bad debt provisions would be 20% higher than expected in 2007, with the overall damage coming in at $10.6bn.”

By

Mark Ishac & Zpryme: Emerging Markets Group

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