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The apostle of economic value

Friday 28th April 2000

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ANZ corporate banking boss Joseph Healy is a man of strong and sometimes controversial opinions.

"We have got to get away from a culture which emphasises 'conservative' gearing or a view that if you don't need to borrow, then don't," he told the EVA Forum in February.

"We believe a firm should borrow if it can, not because it must - in fact the less a firm needs to raise capital to finance expansion, the more money it ought to borrow".

Coming from a businessman who makes money by lending money that view may seem unsurprising. But Mr Healy's economic value crusade is not about selling loans. It is about the return New Zealand investors are getting on the equity they pump into corporations.

Preaching the EVA gospel is not new but this preacher is. In public at least, corporate bankers are notably tightlipped. Every company, after all, is a client or a potential client. So why has ANZ come out with such a stinging indictment of companies' wealth creation efforts?

"We believe the long-term health of the bank is directly linked to to the long-term well-being of its customers," Mr Healy says. "If our customers are creating shareholder value then they will be healthy, prosperous and growing and therefore creating good business opportunities for the bank.

"If they are not creating shareholder wealth then there is a good chance that sometime in the future they will 'die,' most likely through a takeover, or something worse."

No names are used though - with no one but Telecom and Brierley Investments singled out. That's because ANZ acknowledges its figures on individual companies may not be pinpoint accurate. In fact, few companies disclose publicly all the information needed for a detailed EVA analysis.

Mr Healy's CV reveals an early interest in shareholder value. English-born, his MSc in finance from the London Business School includes distinctions in "corporate finance and valuations" and "advanced financial analysis and shareholder value."

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