AFR Companies&Markets GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG www.afr.com |Monday1June2020 Inside Payments New PayPal CEO on the virus surge p16 GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG ANZ urges Wealth Investment banks win private banking p17 GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG Markets Iron ore prices to stricken firms: propel unloved miners p20 Market snapshot ‘wind up now’ S&P/ASX 200 Index (points) 5860 GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG raided their contact lists for experi- Close 5840 James Frost 5755.69 enced bankers as they set about creat- 5820 ANZ Bank urged business owners not ing state-based ‘‘cells’’, or triage centres, to stick their heads in the sand during to manage growing bad debts. Grey- 5800 the coronavirus crisis, warning those haired bankers will be teamed up with who know they won’t recover to take younger relationship managers as they Change 5780 -95.41 action now, while they can still realise have difficult conversations with cus- (-1.63%) 5760 some value from stricken businesses. tomers about struggling businesses. ‘‘For some business owners, the The latest APRA figures show about 10:00 12:00 2:00 4:00 smartest thing for them to do is to wind 750,000 loans worth about $250 billion it up now, and walk away with some have been deferred; the split between S&P/ASX 200 stocks Friday equity,’’ ANZ’s head of retail and busi- home loans and business loans is ness banking, Mark Hand, said. roughly 60:40, but it depended on each Best Close ($)Change(%) Many small to medium enterprises bank’s lending profile. Austal 3.34 +10.23 have been given a six-month reprieve Mr Hand said the six-month deferr- Northern Star 14.80 +7.64 Clinuvel Pharmac 24.22 +6.98 by banks propping up their businesses als were not a deadline and the bank Polynovo 2.75 +6.18 by loan deferrals, and the government would proactively contact businesses Gold Road Res 1.81 +5.23 via wage subsidies. But senior bankers to help them arrive at the right solu- Graeme Carson says the fund made a reasonably well-timed exit from logistics recognise that ultimately, many will company GetSwift, which ran into trouble with ASIC. PHOTO: ARSINEH HOUSPIAN Worst never recover. Virgin Money UK 1.805 -10.20 ‘‘There are businesses that are broke The smartest thing New Hope Corp 1.35 -8.16 now and have no chance of survival but for them to do is to WestpacBanking 17.22 -6.36 have been given a six-month stay of Agility, conviction and cash Scentre Grp 2.23 -6.30 execution,’’ Mr Hand said. ‘‘They will wind it up now, and Worley 8.40 -6.15 hope that the Christmas trading period walk away. will deliver a miracle and they’ll survive pay off for Cyan’s Carson Indices Close (points) Change Mark Hand, ANZ ASX 200 5755.7 -95.4 –butnoteveryonewill.’’ Nikkei 21877.89 -38.42 ANZ made provisions for $1.67 billion GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG Hang Seng (pm) 22961.47 -171.29 in bad debts – including $1 billion just tion. Some may be able to scale down, ‘‘We went into this downturn with a Shanghai A 2989.86 +6.58 from COVID-19 – at its interim results on or pivot to online. Monday fundie Alove cash balance of about 35 per cent,’’ he Currency Change April 30. The bank says about 15 per The conversations to come will be says. ‘‘We’re not an institutional fund TWI 58.8 +0.2 cent of its business lending book – or much longer and more involved – tak- of small caps has led to and we’ve got a very broad client base, $A/US¢ 66.56 +0.34 $A/¥ 71.32 -0.04 19,000 customers – have asked for sup- ing hours or days – than the deferral some sublime results. so we had no real redemption risk $A/€0.6005 steady port. This includes repayment deferrals, decisions put in place after an average whereby we were forced sellers in any- $A/£ 0.5400 +0.0002 fee waivers or other forms of assistance. 10-minute phone call. thing, and it meant we could put the GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG Rates Close (%) Change With banks across the board putting ‘‘We can’t wait six months. We need William McInnes cash to work opportunistically.’’ Cash rate 0.25 steady more resources into call centres to deal to start these conversations with cus- Carson says the firm took a four- 180-day bills 0.162 -0.005 10-yr bonds 0.897 -0.001 with the volume of inquiries, Mr Hand tomers now. The question for us is, The COVID-19 pandemic has been a pronged approach to the pandemic, said ANZ had also begun resourcing ‘How do we get in front of the problem once in a lifetime event for money man- selling companies that appeared directly Commodities Close ($US)Change ‘‘workout’’ and restructuring special- and give them the best chance of walk- agers. Many took a significant hit exposed to the virus, holding businesses Gold (spot) 1726.30 steady Iron ore 102.39 +5.30 ists, to deal with the inevitable spike in ing away with some capital?’’’ through February and March as the local that would experience short-term chal- Oil WTI 35.49 +1.78 business failures he sees from late 2020 Every business customer is different, market tumbled nearly 40 per cent. lenges, deploying excess capital as the and beyond. however, and will require different- While bigger fund managers strug- market fell and holding a small amount ‘‘It is better to have a fence at the top treatment. While some of ANZ’s cus- gled to keep up with the wild swings, of cash for recapitalisations. of the hill than a hospital at the bot- tomers were forced to draw the Cyan Investment Management portfo- ‘‘Early on we did divest a few things tom,’’ he told The Australian Financial Continued p17 lio manager Graeme Carson says his that we thought were working close to Review.‘‘Wehavenointerestinseeing fund has been able to act quickly to the highest risk-profile job,’’ he says. Go to afr.com our customers go into bankruptcy.’’ ̈ Karen Maley Bankers more optimistic help weather the sell-off and maximise ‘‘We were shareholders in Webjet, and for live updates Mr Hand and his executives have on problem loans p28 the rebound. Continued p21 Lynas in rare air, but must get cracking on Kalgoorlie plant GGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGGG Brad Thompson but that is nothing new for a company Department of Defence (DoD) funding permanent waste disposal facility in in the eye of a parochial political storm to help build a heavy rare earths Malaysia for low-level radioactive There is never a dull moment at Lynas Due in the US – after just having survived separation plant in Texas. And it had to waste stockpiled at its Kuantan plant. Corporation. But last Friday wasn’t one diligence one in Malaysia. again shut and restart its Malaysia Ms Lacaze told The Australian of its finest, when the company had to In the past 18 months, Lynas has had operations, this time because of Financial Review last week that Lynas justify market disclosures over possible to shut then restart its $1 billion COVID-19 restrictions there. was set to build a heavy rare separation funding from the United States military processing plant in Malaysia after Lynas has also reset finance and off- plant in Texas with local partner Blue after a ‘‘please explain’’ from the ASX reaching production licence limits. take agreements with its powerful Line with or without DoD backing, but compliance team. Soon after that it fought off a Japan Inc backers, and in April talked its main focus was on what it needed to The rare earth metals producer’s world’s biggest non-China supplier of $1.5 billion takeover tilt from about curtailing production and sales do in WA and Malaysia. disclosure defence ended a week when rare earths. Wesfarmers, pitched at $2.25 a share. after a plunge in rare earths prices. ‘‘We have a relatively short timeline live-wire managing director Amanda Lynas analysts tend to agree on its It then navigated its way through It has been a busy and tough time to execute and we like to execute Lacaze spent hours in virtual meetings strategic value and exposure to long- protests and politicking to secure three personally for Ms Lacaze, who normally projects on time and on budget, or even with investors and potential investors, term growth in electric vehicle and years of breathing space in Malaysia resides in Malaysia but has been locked before time and under budget, and we many of them based in the US. green technology demand. But there’s a but, as part of that licence renewal, had down in Queensland since a funeral for do that by maintaining a focus on the The round of investor meetings lot of variation on where they think the to hastily select a site for a new her mother, Joan, in March. critical aspects that we need to deliver,’’ came hot on the heels of three brokers share price – which closed on Friday at cracking and leaching plant not too far There is no slowing down as Lynas she said. –CanaccordGenuity,CLSAand $2.06 – will end up, with the company’s from its Mount Weld rare earths mine races to meet the deadlines set by CLSA said that if Lynas could Euroz – initiating coverage on a future far from straightforward. in Western Australia, which will cost Malaysian authorities on building the overcome these short-term challenges, company seen by the US, Japan and The additional broker coverage the best part of $500 million.