Costs of running retail banking and wealth management in Asia remain "significant", the bank has warned employees. Its CEO has previously signalled moves to slim down these businesses.

(Repeat of item published late yesterday)

Australia and New Zealand Banking Group, which reported six-month results earlier this week (see here) and merged Asian retail and wealth operations, is carrying out a strategic review of these businesses, warning that costs associated with these areas are “significant”.

Elaborating on its wealth and retail plans in Asia, ANZ said that after expanding these businesses into Asia before the financial crisis, “much has changed in terms of regulatory and capital requirements”.

“It’s now clear that the costs associated with all the above will continue to be significant if we are to sustain and grow the business,” said a memo sent to staff and seen by this publication. WealthBriefingAsia has contacted ANZ for further comment and may update in due course.

“We’re committed to keeping you up to date with progress of the review and once concluded we will advise you of the outcome and next steps. It’s important for you to know that there could be a variety of outcomes from this review. Although they may differ from country to country, the review will deliver the most sensible outcomes for the bank and our customers. It’s early days, though, and no outcome is certain so for now it should be 'business as usual’, which means focusing on our customers and growing the business,” the memo said. It was signed by David Hisco, group executive for Asia retail and wealth, and Farhan Faruqui, group executive, international IIB.

The wealth business of ANZ has seen a number of high-profile changes. In March, the bank said that as part of moves to simplify wealth management, Joyce Phillips, group executive for wealth, marketing and innovation, was leaving the group. At the time, the bank said it will “simplify its approach to wealth management, more closely aligning the distribution of wealth products and services with its retail and commercial businesses and focusing its insurance, superannuation and investments product business in Australia on improving returns and capital efficiency.”

Asked about these matters at the start of March, Shayne Nelson, who took over as chief executive late last year from Mike Smith, said he wanted to improve use of capital currently allocated to the wealth business.

“When I think about the capital that we allocate across the group today we’ve got about 40 per cent of our capital as a group sitting in our retail and commercial businesses which are terrific; we’ve got about 50 per cent sitting in our institutional and Asia-Pacific businesses and it’s about only 10 per cent that sits in wealth. So we want to really maximise and liberate that 10 per cent of our capital in wealth and do the best that we can with it,” he said in a statement.

“It is going to be material in the terms of the impact on the wealth business but for shareholders, given that it’s only 10 per cent, it will be a good thing but it’s unlikely that it’s going to be a dramatic outcome for shareholders,” Nelson said.