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MELBOURNE, June 29 (Reuters) - Australia and New Zealand Banking Group Ltd has sold tens of millions of dollars worth of South Australia government bonds, its chief executive said on Thursday, a week after the state announced a new bank tax.
South Australia bond yields have risen relative to those of other states since it imposed a A$370 million ($280 million) levy on the country's five biggest lenders, indicating investors have become more cautious about lending to the state government.
"We will sell some (more) because we are a bit concerned about the risk profile," Shayne Elliott told FiveAA radio.
The state announced its tax a month after the federal government said it would impose a new A$6.2 billion tax on the big five.
The federal government said it needed to raise revenue from profitable banks to help narrow a budget deficit, while South Australia said its tax would fund job-creation initiatives.
But the banks - ANZ, National Australia Bank Ltd, Commonwealth Bank of Australia, Westpac Banking Corp and Macquarie Group Ltd - said the taxes came as a surprise and would deter potential foreign investment.
Elliott said ANZ holds about $2 billion of South Australia bonds, and would consider selling more should there be increased risk of a rise in the state's borrowing costs - as would be the case if other banks also sold South Australia bonds.
Elliot earlier this week called South Australia's tax "immoral". In a late Wednesday tweet, he said that was "a poor choice of words" which he replaced with "unfair".
Westpac subsidiary Bank SA described the tax as bad public and economic policy, and postponed the establishment of a new team in South Australia.
The state's opposition Liberal Party will decide next week whether to join minor party cross-benchers to block the tax legislation. Party leader Steven Marshall met senior ANZ executives on Tuesday but has yet to make a decision. (Reporting by Joseph Hinchliffe Editing by Jane Wardell and Christopher Cushing)