Australia's ANZ plans A$ Tier 1 issue - investor

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SYDNEY, July 23 (Reuters) - Australia & New Zealand Banking Group (ANZ.AX) (ANZ) is planning to raise a large Tier 1 capital offer to replace a maturing hybrid issue and bolster its balance sheet, an investor said on Wednesday.

The issue, expected to exceed A$700 million ($679 million), would target Australian retail investors and offer a mandatory conversion after five years, mirroring recent Tier 1 issues by Westpac Banking Corp (WBC.AX), Macquarie Group (MQG.AX) and Suncorp-Metway (SUN.AX), the investor said.

The three banks raised a combined A$2.3 billion in Tier 1 capital in the past two months.

They also have used a large syndicate of banks to lead manage their offers and to maximise distribution to retail investors.

ANZ is expected to follow the same trend and appoint a large group of banks to lead manage its upcoming hybrid offer.

Suncorp, Australia's sixth-largest bank, appointed four joint leads, investment bank Macquarie hired the most with seven banks. Westpac, the nation's fourth-largest bank, mandated six institutions.

The proceeds of ANZ's new offer would replace a A$1 billion issue of hybrids, called Stapled Exchangeable Preferred Securities (StEPS), initially issued in 2003 and with a reset date of September 15.

National Australia Bank (NAB.AX) (NAB), Australia's largest bank, is expected to raise a similar Tier 1 capital issue to bolster its balance sheet, according to a fund manager.

He estimates NAB has the capacity to issue A$500 million to A$600 million of Tier 1.

Tier 1 is a form of very liquid capital that banks are required to maintain as a cushion to protect bank deposits. It is the closest type to equity and also the most expensive form of debt for banks. ($1=1.031 Australian Dollar) (Reporting by Cecile Lefort)