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).