ANZ moves to grab market share of Suncorp home loans

Australia and New Zealand Banking Group Limited (ANZ) has announced that it has signed a share sale and purchase agreement with Suncorp Group Limited (Suncorp) to buy Suncorp Bank for $4.9 billion.

The transaction, which is subject to regulatory approvals from the Federal Treasurer and the Australian Competition and Consumer Commission, will see the bank continue to operate under the Suncorp Bank brand (under a license agreement between ANZ and the Group for a period of five years after completion), ANZ indicating its intention to operate it as a separate business for a period of at least three years.

At a time when the big bank is talking about reconstitution its Australian retail and commercial bank and bolstering its technology to enhance its customer proposition, the purchase would add nearly $60 billion customer loans on ANZ’s balance sheet.

The transaction includes Suncorp’s $47 billion in home loans, $45 billion in deposits and $11 billion in commercial loans.

ANZ chief executive Shayne Elliott said he thought the move would help “ANZ is increasing its presence” and “enhancing competition in one of Australia’s most important regions”.

As Queensland recorded the highest number of interstate arrivals during the pandemic, Mr Elliott pointed to Queensland’s demographics, growth profile, economic diversification and major commitment to sustainability as positive factors driving the purchase.

“It’s a good company with great momentum, especially in home lending, and it has this complementary geography,” Elliott said at a news conference on Monday (July 18).

The move will bring the bank’s home lending market share in Australia to around 15%, Mr. Elliott said, with ANZ owning around 13 per cent and Suncorp around 2 per cent (50 per cent of Suncorp’s share being in Queensland).

While ANZ had a queensland Present since 1851, it has focused primarily on “institutionals” and this purchase will enable the bank to provide “better opportunities for individuals and small businesses” for years to come, he said.

“We are acquiring a customer base of 1.2 million, 700,000 of whom live here in Queensland. This is a very, very valuable insight. Customers are truly at the heart of what we acquire – not bricks and mortar,” Mr. Elliott said.

Upon completion of the sale (expected in the second half of calendar year 2023), Mr Elliott said it would also benefit Queenslanders with a ‘stronger insurance company’ and a stronger bank .

Suncorp Bank will continue to be led by CEO Clive van Horen, who will report to Mr Elliott and join ANZ’s executive committee after completion.

Mr Elliott said ANZ was committed to ensuring the Suncorp Bank franchise “continues to thrive”.

“We will maintain the network and staffing levels we inherit and come to an end for at least three years after signing“, Mr. Elliott said.

Growth in Q3-22 mortgages

As rising inflation and interest rates began to slow request In the home loan market, the major bank also reported that loan volumes increased 3% ($2 billion) in the third quarter of fiscal 2022, with strong growth in June.

“What this showed is that we are back to growing our home loan processing,” Elliott said.

“And we’re back in line with our peers in turnaround time. And so these things are behind [us].

He added: “Suncorp [Bank] has done a really great job in processing home loans and is actually one of the leaders in this area and we want to learn from that,” Elliott said.

As the bank moves to bolster its technology and digital home lending capabilities with ANZ Plus, Elliott said the conversation about moving customers from Suncorp to ANZ Plus would come in due course.

“Clive [van Horen] and the team will continue to operate as it does today. And we will migrate smoothly and appropriately to the ANZ Plus platform, either blue-branded or yellow-branded. We don’t have a specific deadline“continued the CEO of ANZ.

Suncorp focuses on severe weather insurance

As Suncorp unloads its bank, the company said it will focus on its insurance operations (including its other brands AAMI, GIO, Shannons, Apia and Vero) in Australia and New Zealand.

Suncorp Group CEO Steve Johnston reiterated that the move is in “Queensland’s best interest” and will allow the company to focus on insurance challenges and opportunities.

“This will allow us to really [focus] on our insurance business and the challenges and opportunities that currently exist in insurance regarding the frequency of climate change and the severity of weather conditions, ensuring that all of these people return to their homessaid Johnston.

“This is a win-win transaction for Queensland and [it’s] a win-win transaction for both parties.

As well as announcing the acquisition of Suncorp Bank, ANZ also confirmed that it has now withdrawn from discussions with Kohlberg Kravis Roberts & Co (KKR) over its potential acquisition of the business management solutions provider and financial and accounting solutions, MYOB.

Last week, ANZ published a statement noting the negotiations, but said the two companies had yet to come to a statement and had no certainty that would happen.

The bank did not explain why it pulled out of the MYOB deal.

[Related: ANZ makes bid for MYOB to bolster SME offering]

Priscilla C. Carnegie