ANZ raises A$1.081 bln in Tier 1 capital

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SYDNEY, Oct 1 (Reuters) - Australia and New Zealand Banking
Group (ANZ.AX), Australia's third-largest lender, raised
A$1.081 billion ($853.9 million) in Tier 1 capital, the bank
said.

ANZ is the fourth Australian bank to raise this type of
capital targeting retail investors in 2008, with further issues
expected to follow.

National Australia Bank (NAB.AX) (NAB) and Commonwealth
Bank of Australia (CBA.AX) (CBA) are eyeing similar issues to
bolster their balance sheets, according to market sources.

NAB is expected to announce a Tier 1 issue after its annual
results on Oct. 30. CBA is likely to refinance A$750 million of
Tier 1 perpetual exchangeable resettable listed securities
(PERLS II) which roll over on March 15, 2009, sources said.

ANZ's hybrid offer, whose margin was set in September at
250 basis points over the bank bill swap rate, closed on
Tuesday.

Around 90 percent of the notes were placed with retail
investors with the balance sold to institutions, a joint lead
said.

The issue, to be rated A+ by S&P and Aa3 by Moody's, was
led by an unusually large syndicate of joint leads including
ANZ, Citi, CommSec, Deutsche Bank, Goldman Sachs JBWere,
JPMorgan, Macquarie and UBS.

ABN AMRO Morgans and Credit Suisse acted as co-managers.

The issue targeted retail investors by offering franked
dividends, which have tax benefits, and was particularly
popular because of a lack of hybrid supply in Australia and an
attractive return for yield-starved buyers.

ANZ's offer is part of a relatively new type of Tier 1
capital, called non-innovative Tier 1, that offers a cheaper
form of capital compared with ordinary equity.

Banks are required to maintain Tier-1 as a buffer to
protect bank deposits.

The offer consisted of convertible preference shares (CPS)
that will mandatorily convert into ordinary shares with a 2.5
percent discount in June 2014. The maximum conversion number
has been set at 11.5274 ANZ ordinary shares per CPS.

Dividends on the CPS are preferred, fully franked and
non-cumulative. The notes will pay a dividend of 6.8752 percent
per year.

Key dates of the offer:

Normal trading start: Oct. 6

First distribution pay: Dec. 15

Mandatory conversion: June 16, 2014
($1=1.266 Australian Dollar)
(Reporting by Cecile Lefort)