The banking group that last year sold wealth and retail banking operations in Asia is continuing to overhaul its structure.

ANZ, the Australia-headquartered bank that spun off its Asian wealth and retail operations last year, has reached a deal to sell its 20 per cent stake in Shanghai Rural Commercial Bank to China COSCO Shipping Corporation and Shanghai SinoPoland Enterprise Management Development Corporation.

COSCO and SinoPoland Enterprise will each acquire 10 per cent of SRCB, paying a total of RMB9.190 billion ($1.32 billion), which equates to a price-to-book ratio of about 1.1 times SRCB’s net assets as at December 2015.

The sale will boost ANZ’s APRA CET1 capital ratio by about 40 basis points, ANZ said. The sale, agreed on 31 December 2016, is subject to customary closing conditions and regulatory approvals and is expected to be completed by mid-2017.

ANZ’s relationship with SRCB dates back to its investment in the latter bank in 2007. Since that year, ANZ said it has recognised A$1.3 billion ($936 million) of equity accounted earnings and received A$178 million in dividends. 

“As we have previously stated, the sale reflects our strategy to simplify our business and improve capital efficiency. The sale will also allow us to focus our resources on our institutional banking business in Asia,” Graham Hodges, ANZ deputy CEO, said in a statement yesterday. “This includes a significant commitment to China over the past 30 years with 100 per cent ANZ-owned branches in Beijing, Shanghai, Guangzhou, Chongqing, Chengdu, Hangzhou and Qingdao serving our institutional clients," Hodges added.

After costs and taxes, the sale price is broadly in line with the carrying value of the investment in ANZ’s accounts as at 30 September 2016. This includes accumulated equity accounted profits and foreign currency translation reserves over the period of investment. However, if completion occurs after the end of the first half of the 2017 financial year, accounting timing differences will result in a negative impact to net profit after tax in the first half, and a largely offsetting positive impact at completion, ANZ said.

Last October, ANZ sold its Asian wealth and retail banking businesses to Singapore-headquartered DBS, becoming the latest firm to dispose of Asian wealth management businesses. (For more on that deal, see here.)