Australia's ANZ seen upping stake in broker Tricom

SYDNEY (Reuters) - Australia and New Zealand Banking Group (ANZ.AX) is likely to increase its stake in struggling broker Tricom as it seeks to stem loan losses, days after Denmark's Saxo Bank broke off talks to rescue Tricom.

ANZ, Australia's third biggest lender, said it is holding talks with Tricom, a margin lender, which roiled Australia's stock market in January when it failed to meet settlement obligations to the stock exchange and was forced to sell its margin book as markets plunged.

Analysts said ANZ could convert around A$80 million ($68 million) it is owed by Tricom into equity in the company, a move they said would be positive.

"They (ANZ) have got a very unattractive exposure and they are trying to work out the best avenue to deal with it," said Angus Gluskie, a portfolio manager at White Funds Management.

"Taking an equity stake in Tricom is certainly a fall-back position for ANZ, and it's certainly preferable if there was no other solution," Gluskie said.

An ANZ spokeswoman said discussions with Tricom were progressing satisfactorily at this stage. She declined to elaborate.

The Tricom talks come as ANZ is trying to recoup loans to another margin lender, Opes Prime Stockbroking, which collapsed earlier this year amid tumbling stock markets. In July, ANZ announced about A$1 billion in bad-debt charges but did not say whether that included potential losses on Opes and Tricom.

Since its problems in January, Tricom has struggled to get back on its feet. It is under investigation by the stock exchange and could face prosecution.

In February, Australian financial services firm Bell Financial (BFG.AX) scrapped a plan to buy Tricom, while last week Saxo broke off talks to take a 35 percent stake.

In April, ANZ and investment firm Babcock & Brown Ltd BNB.AX took part in a recapitalisation of Tricom, with Babcock raising its exposure to A$40 million.

Analysts said it was unlikely a third party would step in and take Tricom off ANZ's hands.

"I'm not too sure what other options would be available. I don't think there are that many options for them," said Paul Xiradis, chief executive of investment firm Ausbil Dexia.

"But for ANZ it means they may not necessarily have a loss, but acquire a business, or have a good portion of a business, which it will hopefully generate some returns from rather than actually realising a loss," he said.

ANZ shares have fallen 38.16 percent so far this year and were trading at up 2.8 percent at A$17.11 at 0313 GMT on Tuesday in a broader market .AXJO up 0.9 percent.

($1=A$1.18)

(Editing by Jonathan Standing)