News Release
For release: 12 December 2017

Transcript: bluenotes interview with ANZ Chief
Executive Shayne Elliott and Andrew Cornell
The following is a transcript of a video interview with ANZ Chief Executive Officer Shayne
Elliott following the sale of ANZ’s life insurance business to Zurich Financial Services
Australia.
The interview was conducted by Andrew Cornell Managing Editor of bluenotes, ANZ’s digitalpublication for news, opinion and insight and can be viewed at www.bluenotes.anz.com
Andrew Cornell

Morning Shayne, thanks very much for speaking with bluenotes again. You've
now completed the life transaction with the sale to Zurich. Can you give us asense now of what the business looks like? Previously you sold the pension
and investments business to IOOF now this tranche. What is the shape of theANZ Wealth business?

Shayne Elliott

Well first we should just step back a little bit and understand why we're doing
this. It's all about being the best bank we can be for our customers. And in afast changing world, particularly with new technology and new disruptivecompetitors, we want to win by doing the very, very best thing for ourcustomers and being totally focused on them.
So we said we should do a few things and do them really well. The best way
to do that is partnering with the world's best. And so we said hey, we've got
a great banking business, in terms of being the best bank for homeowners
and people running a small business but in terms of some of the peripherybusinesses, like Wealth, we didn't really have a winning proposition there andwe were there, we were good. So we had a different way forward and that's
about partnering. And so we said we want to be talking to customers but wedon't want to be manufacturing product.
So we've partnered with two great companies. IOOF in terms of our pensions
and investments product and today announcing a partnership with Zurich,
one of the world's best insurance companies. And so it's really about
partnering and doing the best thing for customers.

Andrew Cornell

So when you look at the shape of the business what it was and what stays
with ANZ today what's with Zurich and what's with IOOF, then the sort ofcustomer face is still with ANZ, manufacturing on one side with Zurich andthe other side with IOOF. What else does ANZ still have, how do the parts
work together?

Shayne Elliott

Well essentially what you just said. So people will still be able to come toANZ, whether that's in a branch; whether that's online; whether that's
through a call centre; and still be able to get access to those great products
so, you know, nothing has changed from our customers' perspective except
we're going to now be partnering in terms of the manufacturing andmanagement of those products with some of the world's best companies andso we keep the customer front end, and an important part that people mightsee and know is the financial planner.

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

So the ANZ financial planners, which is about 300 of them across thecountry, they're going to stay. They're still going to be working in ourbranches and talking to our customers about their financial prospects.
Andrew Cornell

You mention Zurich, obviously one of the most well-known brand names inthe business with a global scale. Originally the transaction was going to be
the whole business of Wealth and its gone part to IOOF and part to Zurich.
What was behind that and how did you choose Zurich for this latest part?

Shayne Elliott

So we've always run the business together for many, many years. So in an
ideal world it was simpler for us potentially to be able to just sell it together.
But through the process we were really focused on doing the right thing forour customers, which is how to get the best product to our customers. And
so what we found, in dealing with the number of parties that were interested,is actually we found that the best way was to split it up and do the best wecan with IOOF on pensions and investments because they're really strong inthat. And do the best that we can on life insurance with Zurich. Here's aworld leader who's really, really the leader and now going to be the number
one retail life provider in Australia. So it was just better for our customers todo that. A little bit more complexity for us; a little bit more cost associatedwith the separation; but absolutely in the interest of our customers.

Andrew Cornell

But you're happy with the overall pricing as well then?

Shayne Elliott

Absolutely. When you add it all up it's a very fair price for the assets that wehad. And more importantly, this is less about the price that we get. This isabout entering into a 20 year relationship with two great companies to makesure that we're always going to have great, attractive, simple, easy-tounderstand product out there for the benefit of our customers.

Andrew Cornell

You mention 20 years - can you talk us through a couple of the key elementsof that? Is it structured around targets, for example, or other hurdles? What
are the key points of how it will work?

Shayne ElliottNo, it's not structured around targets. And that's really important because
what we know, and we've seen this over time in our industry and others, iswhen you have sales targets as part of these agreements; it can potentiallylead you to poor outcomes because you're too focused on achieving thetargets rather than doing the right thing by customers. So no, it's a real
partnership. We're both in this together. We both want to invest in terms ofbetter product, better distribution, and more digital, all of those things.
But it's really just; it's a marriage of two great companies - three in fact, in
this particular case - with IOOF, Zurich and ANZ, to do the right thing bycustomers. Yes, we had some agreements about how we will resolve
problems if and when they come, but it's really about focus and acommitment to each other to do the best.

Andrew Cornell

When we look back to the last full year result a couple of months back it'sfair to say the market was pleased with this sort of simplification process but
then immediately questions were raised about earnings, how do you fill theearnings hole? Was there an earnings implication here with the Wealthtransaction?

Shayne Elliott

Well as we sold these assets, these assets go to these new partners. So theearnings go with it. But net-net, so we'll be a slightly smaller company as aresult, so we'll have less capital out there and we'll have slightly lessearnings. But in terms of returns, the returns on that capital really don'tchange the whole lot.

So it's a kind of net-square from that perspective. But we believe that beingslightly smaller but more focused ultimately is in the interests of ourshareholders and our customers.
Andrew Cornell

Indeed, you touch on capital - capital will be freed up by this transaction andthe ASX announcement mentions that there's an opportunity there for capitalmanagement. What are the options for capital management?

Shayne Elliott

Well we don't have the money yet. So on both transactions; they're going tohappen over the next 12 months. So let's say in about a years’ time we'll be
the recipient of most of that money and depending on where we are, youknow things change, if there's anything I've learnt in the last few years things change.
Depending on where we are at the time, we'll have to have a look at how
much capital we need to run the bank; how much capital we need to satisfy
our regulatory responsibilities. And if we have excess then there are options
to return it. Generally those things would be through either dividends,
although our ability there would be constrained by franking or potentiallythrough buybacks of some description.

Andrew Cornell

Finally, the broader simplification process that has underpinned your time as
CEO. Across the whole bank how far through that simplification are we?

Shayne Elliott

Well I feel like we’ve sort of broken the back of that if you were. We're morethan halfway through, we have simplified by selling some partnership stakesin Asia. We've sold quite a number of businesses in fact I think at last countup to about 17 disposals some big and obviously a lot quite small. So I think
we've really got momentum on that. We've reduced the number of productsthat are available in our branches which is again another important part ofsimplification.
It all goes back to this really simple philosophy that in a complex world, weknow that our customers are busy and just want us to help them out. The
way to win for our customers and our shareholders is to do a few things anddo them incredibly well. We're really clear on what those few things are andessentially we are just exiting, shrinking or partnering on everything else.
We're more than halfway through. But we still have a long way to go.

Andrew Cornell

Thanks very much for speaking again with bluenotes.

Shayne Elliott

Thank you.

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