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ANZ & ING Joint Venture - Supplementary Information

Document date:  Wed 10 Apr 2002
Published:  Wed 10 Apr 2002 14:04:00
Document No:  189075
Document part:  A
Market Flag:  N
Classification:  Progress Report

AUSTRALIA AND NEW ZEALAND BANKING GROUP       2002-04-10  ASX-SIGNAL-G

HOMEX - Melbourne                                                     

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KEY ELEMENTS OF THE JOINT VENTURE

1.1 OVERVIEW

The Joint Venture will incorporate ANZ's and ING's funds management
and life insurance businesses in Australia and New Zealand. It will
be called ING Australia Limited and will, subject to necessary
regulatory approvals, be established on 1 May 2002.

The Joint venture will be created by: ING Australia issuing shares to
ANZ as consideration for the acquisition of the ANZ businesses being
contributed to the Joint Venture and ANZ subscribing for new shares
in ING Australia. Together, these two transactions will result in ANZ
having a 49% shareholding in ING Australia.

The Joint Venture will be owned 51% by ING and 49% by ANZ, with ANZ
and ING having an equal say in all key decisions which affect the
strategic direction of the Joint Venture. The Joint Venture has been
valued at A$3.75 billion with ANZ making a capital contribution of
A$960 million reflecting the relative values of the businesses
contributed.

The Joint Venture will become the supplier of funds management and
insurance products to ANZ within Australia and New Zealand. The Joint
Venture's asset management activities in Australia will be outsourced
to ING Investment Management, which will remain 100% owned by ING.

The Joint Venture will include the majority of ANZ's and ING's funds
management and insurance activities in Australia and New Zealand. It
will not include the following businesses:

* For ANZ: Executors & Trustee Company and Lenders Mortgage Insurance.
The financial planners will also remain employed by ANZ  

* For ING: its interest in its Australian general insurance Joint
Venture with QBE, ING Investment Management, ING Real Estate, ING's
wholesale, investment banking and retail banking operations,
including ING Direct The Joint Venture will provide the
administration for V2 Plus. The profits arising from V2 Plus when
sold through existing ANZ distribution channels will remain with ANZ. 

The Joint Venture will earn profits on V2 Plus sold through other
channels.

1.2 Board The Joint Venture will have a Board of Directors of whom an
equal number (four) will be appointed respectively by ANZ and ING.
The initial Directors will be:

* ANZ 
- Elmer Funke Kupper 
- David Gonski 
- Peter Hawkins 
- Peter McMahon 

* ING 
- Tony Berg (Chairman) 
- Phillip Shirriff 
- Peter Smyth 
- Karen Wilson

In addition, the Joint Venture CEO will be a non-voting director. 

The Chairmanship will rotate between nominees of ING and ANZ every
three years, with the appointment being subject to the other party's
approval. The first Chairman will be Tony Berg.

1.3 CHIEF EXECUTIVE OFFICER

ING will nominate the CEO from time to time, with the appointment
being subject to ANZ's approval. The CEO will be a part of ING's
senior management group and will participate in senior ANZ management
forums. The first CEO will be John Wylie.

1.4 MANAGEMENT

The Board will delegate to the CEO and the executive management team,
the power and responsibility for managing the business and
implementing the business plan on a day to day basis.

The Board of the Joint Venture will agree the appointment of the
direct reports of the CEO. The first CFO will be Michael Rowland,
currently the CFO of the Personal Financial Services division at ANZ.
The performance of the top management team of the Joint Venture will
be subject to formal, regular review by the Joint Venture Board.

1.5 VOTING

All key issues (including business plans, major capital expenditure,
acquisitions, etc) will require unanimous Board approval. The
Chairman will not have a casting vote.

In addition, a number of matters require the approval of both
shareholders. These include major items of capital expenditure,
acquisitions or disposals in excess of A$20 million and changes to
the Board structure.

1.6 DISTRIBUTION THROUGH ANZ

Subject to a number of agreed exceptions, the Joint Venture is
intended to be the exclusive supplier (manufacturer or sourcer) of
insurance and funds management products distributed by ANZ.

The Joint Venture will provide ANZ with a range of third party
products as part of Wrap, Master Trust and Manage the Manager
products, and will also supply an appropriate range of stand-alone
third party retail products.

1.7 BRANDING

The Joint Venture will manufacture, market and service products under
the ING brand for distribution through professional adviser networks,
and under the ANZ brand for distribution through ANZ Bank channels.

1.8 PRODUCT PRICING AND DISTRIBUTION COMMISSIONS

The initial package of commissions, overrides, trails and services
provided by the Joint Venture to ANZ has been agreed with reference
to both current ING pricing and the arrangements between the Joint
Venture and other large distributors. These arrangements will apply
in relation to existing ANZ products (and any products which
supercede the existing ANZ products) until 30 September 2004 in
Australia.

Thereafter, these arrangements will be determined on a commercial
basis set by reference to the Joint Venture's other large
distributors.

1.9 ING INVESTMENT MANAGEMENT (IIM)

IIM will provide investment management services to the Joint Venture
in Australia and will acquire ANZ's Australian asset management
business. The investment management fees payable to IIM by the Joint
Venture during the first five years have been agreed between ANZ and
ING as part of the arrangements for the Joint Venture. Thereafter,
the investment management fees will be reviewed on an annual basis
and will be determined on a commercial, arm's length basis.

1.10 LIMITED TERMINATION RIGHTS

ANZ and ING see the Joint Venture as a long-term commitment.
Accordingly, neither party may terminate the Joint Venture in its
first 10 years, other than where a material competitor of the Joint
Venture has acquired control of either ANZ or ING (see section 1.12),
in certain other limited circumstances, or unless they agree to do
so. Once the Joint Venture has been in existence for 10 years, either
ANZ or ING may terminate the Joint Venture with at least 12 months
notice.

1.11 MEANS OF DISSOLUTION

In the event of the Joint Venture being dissolved, the transaction
documents provide for ANZ to acquire that part of the Joint Venture
which has served ANZ's customer base, with ING acquiring the balance
of the business, including operational infrastructure. The actual
method of dissolution will depend on the circumstances and will be
agreed by the parties at the time. Failing agreement, the matter will
be referred to an expert to determine the most efficient method of
dissolution and the values ascribed to the businesses; such a
valuation would apply a fair value test. ING would have an obligation
to provide ANZ with support for up to two years after the Joint
Venture is dissolved.

1.12 CHANGES OF CONTROL OF ANZ OR ING

A change in control of either ANZ or ING would not of itself lead to
a right to terminate the Joint Venture. However, if a material
competitor of the Joint Venture acquires control of either ANZ or ING
(or the relevant division of ING, being ING Insurance), then if:

n the acquirer and the other Joint Venture partner are not able to
agree the terms on which the Joint Venture business and the competing
business should be merged; and n the acquirer does not divest its
competing business,

either party has a right to terminate the Joint Venture.

The right to terminate the Joint Venture does not arise until 12
months after the change of control has occurred.

In this context, material competitors are:

AMP Limited, Commonwealth Bank of Australia Limited, National
Australia Bank Limited or Westpac Banking Corporation;

any party with at least 2.5% of total funds under management in
Australia; and any party with at least 2.5% in aggregate of total 
funds under management and administration in Australia

1.13 MERGER WITH MAJOR AUSTRALIAN FINANCIAL INSTITUTION

If ANZ merges with AMP, CBA, NAB or Westpac during the first five
years of the Joint Venture and the party merging with ANZ does not
transfer its funds management and life insurance businesses to the
Joint Venture, or dispose of those businesses to a third party, ING
will be entitled to sell its 51% shareholding to ANZ at its then fair
value.

Similarly, if ING merges with any of AMP, CBA, NAB or Westpac during
the first five years of the Joint Venture, ANZ would have an option
to acquire ING's 51% shareholding in the Joint Venture, again at its
then fair value. 

If these rights are not exercised, the rules relating to change of
control set out in section 1.12 would apply, irrespective of the form
in which the merger occurs.

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