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ANZ Capital Notes

ANZ Bank New Zealand Limited (ANZ) issued NZ$500 million capital notes (Capital Notes) on 31 March 2015. The Capital Notes are mandatory convertible, non-cumulative perpetual subordinated debt securities. Depending on the circumstances, the Capital Notes may be converted into shares in Australia and New Zealand Banking Group Limited (ANZBGL) or written off. The Capital Notes are not guaranteed by any person, and ANZBGL does not guarantee ANZ.

The paragraph above is a summary only. Full details of the Capital Notes are contained in the investment statement dated 23 February 2015 (Investment Statement) and in the "Note Terms" forming schedule 1 of the deed poll dated 23 February 2015 as amended and restated on 26 June 2019 (Deed Poll). The information in the Investment Statement was correct as at the issue date (31 March 2015). Copies of these documents are available by clicking on the links below.

The Capital Notes are riskier than a bank deposit.

The Capital Notes are not call deposits or term deposits with ANZ and may not be suitable for many investors.

Updates on the Capital Notes

ANZ was informed by the Reserve Bank of New Zealand (RBNZ) in April 2020 that locally incorporated banks cannot pay dividends on ordinary shares and should not redeem capital notes during the COVID-19 crisis. This decision by the RBNZ was taken to further support the stability of the New Zealand financial system during this period of economic uncertainty.

This decision meant the Capital Notes could not be redeemed on the Optional Exchange Date (25 May 2020). In addition, ANZ decided not to exercise its option to convert the Capital Notes into ANZBGL shares on the Optional Exchange Date.

The RBNZ’s decision does not affect ANZ’s ability to pay interest on the Capital Notes. Interest is scheduled to be paid quarterly in arrears, is subject to ANZ’s discretion and other conditions as set out in the Investment Statement, and is non-cumulative.

The interest rate on the Capital Notes was reset on 25 May 2020 and will then reset on each quarterly interest payment date thereafter to the sum of the three month bank bill rate plus the margin of 3.50% per annum. ANZ will advise the interest rate for each quarter through a NZX announcement.

The terms of the Capital Notes also provide for their mandatory conversion into ordinary shares of ANZBGL (listed on the NZX and ASX) in May 2022 (conversion is subject to certain conditions as set out in the Investment Statement). 

Regulatory Event

On 17 June 2021, the RBNZ published new Banking Prudential Requirements (BPRs). Under changes outlined in the BPRs, from 1 January 2022 there will be a 12.5% reduction in the regulatory capital recognition of ANZ’s existing Additional Tier 1 capital instruments, including the Capital Notes.

As a result, ANZ has determined that a Regulatory Event (as defined in the Deed Poll) has occurred in respect of the Capital Notes.

The occurrence of a Regulatory Event means that ANZ may choose to redeem the Capital Notes at its discretion. A redemption of the Capital Notes is subject to certain conditions, including approval from the RBNZ and the Australian Prudential Regulation Authority.

No decision has been made on whether ANZ will redeem the Capital Notes (subject to the regulatory approvals), and holders should not expect that to occur.

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