Spat With Nhb May Cost Anz $300m

The on-going dispute between Australia & New Zealand banking group, (ANZ) and National Housing Bank (NHB) would cut nearly A$300 million from ANZs post-tax profit if the bank loses the case, analysts said yesterday.

But such a loss would be considered an abnormal item, and thus counted as a one-off hit, rather than a reflection of the banks ongoing profitability, said Alastair Hunter, banking analyst with J B Were & Son. ANZs net profit fell eight per cent to A$1.02 billion in the year ended September 30, 1997, from A$1.12 billion a year earlier.

NHB and ANZs wholly-owned subsidiary, ANZ Grindlays, is locked in a five-year dispute over Rs 506 crore in cheques, drawn on NHB account, which NHB said should never have been cleared by ANZ.

The cheques were written and deposited with ANZ by stockbroker Harshad Mehta shortly before the 1992 securities scam.

Though ANZ was soon ordered to repay the funds to NHB, an arbitration panel last year ordered NHB to hand the money back, at an 18 per cent annual interest rate. The sum would now total nearly A$300 million.

But last week, a special judge struck down that ruling, ordering ANZ to repay the funds. ANZ, whose A$138.24 billion in total assets ranks it as Australias second-largest bank , said it will file an appeal before the Supreme court. Last weeks ruling allows ANZ to keep the disputed funds until the appeal is settled.

The bank made a general, rather than a specific, provision against the potential loss in 1992. That means, according to Hunter, that the bank would have to write off the loss again if it loses the appeal.

The latest round in the long dispute comes at an inconvenient time for ANZ, whose exposure to Asian loans has recently come under scrutiny by investors. ANZ has extended about A$10 billion credit in Asia out of a total loan of book of A$98.1 billion, a greater proportion than any other large bank in Australia.