Suncorp Group has signed a share sale and purchase agreement with Australia and New Zealand Banking Group Limited (ANZ) to sell its banking business for $4.9 billion. Suncorp’s insurance operations in Australia and New Zealand are not part of the transaction and the company’s head office will continue to be in Queensland.
The transaction is expected to result in net proceeds of $4.1 billion. The indicative proceeds are net of the impact of separation costs, transaction costs, other divestment related costs, and provisions indicative capital gains.
Suncorp said the bank will continue to operate under the Suncorp Bank brand via a five-year licensing agreement, with the company to receive a fee of $10 million per year. The period may be extended for up to two years.
Suncorp said the transaction supports the ongoing transformation of its insurance businesses as it builds market position and scale in attractive and growing segments in Australia and New Zealand.
“This proposal has been assessed through the lens of creating value for shareholders and, just as importantly, to ensure there is alignment of purpose and values and positive outcomes for our people and customers,” said Suncorp Chairman Christine McLoughlin.
“Both businesses will benefit from a singular focus on their growth strategies and investment requirements.”
Suncorp Group CEO Steve Johnston said that as a dedicated insurance business, Suncorp will be singularly focused on meeting the needs of its customers.
“We acknowledge the needs of insurance customers are rapidly changing, with a preference for digital interactions and for product design to take into account personal circumstances and risk profiles,” Johnston said. “At the same time, the external environment has seen more frequent and severe natural hazard events resulting in increased costs and affordability challenges.”
According to Johnston, the decision to divest the bank was not taken lightly and occurred after extensive analysis and consideration. The transaction is subject to a range of regulatory approvals from the Federal Treasurer and the Australian Competition and Consumer Commission (ACCC).