ANZ to buy Suncorp Bank for $4.9 billion, ditches MYOB talks

The deal is the most significant for Brisbane's largest listed company since it sold its life insurance arm to Japanese insurance group Dai-ichi Life for $725 million in early 2019. 

It is a transaction that is expected to deliver net proceeds of $4.1 billion for Suncorp Group, representing $3.21 per share with the division sold at a 1.3x multiple of price to net tangible assets (NTA).

Suncorp account holders are unlikely to see any major branding changes for several years however, as a licensing agreement for the brand is expected to be in place for five years post-completion with a minimum fee of $50 million for usage to be paid by ANZ over time.

ANZ has also stated its intention to run the bank as a separate business to minimise disruption and support its ongoing growth for at least the following three years.

For those three years, ANZ has committed to no net job losses or branch closures as a result of the transaction, and has promised to make $10 billion of lending available to support Queensland businesses over that timeframe.

Suncorp chairman Christine McLoughlin says the proposal has been assessed through the lens of creating value for shareholders, and making sure purpose and values are aligned.

"We believe the agreed price fairly values the Bank and reflects the hard work of our people and progress made on delivering our strategic objectives," she says.

"Suncorp Group, which is the proud home of several of Australia and New Zealand’s leading and most trusted insurance brands including AAMI, GIO, Shannons, Apia and Vero, and of course the Suncorp brand, will continue to offer the same great service to Queenslanders.

"Our purpose of building futures and protecting what matters – the focus of our company for over 100 years – will remain at our core and enable our people to deliver on our vision to create the leading Trans-Tasman insurance company."

Suncorp Group's CEO Steve Johnston explains that as a dedicated insurance business the group will be singularly focused on meeting the needs of its customers and community at a time when "the value of insurance has never been greater".

"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," he says.

"At the same time, the external environment has seen more frequent and severe natural hazard events resulting in increased costs and affordability challenges.

"Suncorp will continue to be at the forefront of advocating for a more resilient Australia and for all levels of Government to focus on mitigating the impacts of major weather events through improved public infrastructure, subsidies to improve private dwellings and an overhaul of planning laws."

He adds the decision to divest the bank had not been taken lightly and has been informed by extensive analysis and consideration.

"By combining with a larger banking group, Suncorp Bank will be well positioned for the future. Customers will see benefits including access to a wider range of products and services, and career opportunities will be enhanced for our people," he says.

"Suncorp Group remains fully committed to supporting the Bank until completion of the sale."

As part of its commitments, ANZ will also allocate $15 billion of new lending as part of existing commitments to support Queensland renewable projects and green Olympic Games infrastructure over the next decade, as well as $10 billion of new lending for energy projects particularly those targeting bioenergy and hydrogen.

ANZ chief executive officer Shayne Elliott describes the acquisition as a cornerstone investment for the group and a "vote of confidence in the future of Queensland".

"With much of the work to simplify and strengthen the bank completed, and our digital transformation well-progressed, we are now in a position to invest in and reshape our Australian business. This will result in a stronger more balanced bank for customers and shareholders," Elliott says.

"ANZ is committed to making a meaningful contribution to the economic and social prosperity of Queensland and today’s announcement will see ANZ increase its presence, and we believe improve competition, in one of Australia’s most important regions.

"We opened our first branch in Brisbane in 1851 and since then we’ve built a great business in Queensland, particularly in Institutional banking."

The ANZ CEO emphasises Queensland has recorded better economic growth, better workforce participation and more interstate migration than any other state or territory in Australia since March 2020, contributing 18 per cent to gross domestic product (GDP).

Suncorp Bank will continue to be led by current CEO Clive van Horen.

"We have admired the transformation that has occurred under the leadership of Steve Johnston and Clive van Horen and believe Suncorp Bank is a natural fit with ANZ given its culture, risk appetite and customer focus," Elliott says.

"ANZ has licenced the Suncorp Bank brand for five to seven years and we are committed to maintaining its current branch footprint in Queensland for at least three years post completion."

Other asset sales from Suncorp in recent years include the offloading of its wealth business in March this year for $45 million, the sale of its joint venture RACTI for $83.75 million in December last year.

Just prior to the announcement, ANZ revealed it had withdrawn from negotiations with KKR to acquire MYOB. The group is raising $3.5 billion to make the acquisition, offering shares at $18.90 each - a 12.7 per cent discount to the last trading price.

The acquisition is subject to a minimum completion period of 12 months and conditions such as approvals from the Federal Treasurer and the competition and consumer watchdog, as well as certain amendments to the State Financial Institutions and Metway Merger Act 1996 (Qld).