What will Suncorp do next amid bank sale hitch?
What will Suncorp do next amid bank sale hitch? | Insurance Business Australia
Insurance News
What will Suncorp do next amid bank sale hitch?
Insurance group to cross the bridge when it comes to it
Insurance News
By
Terry Gangcuangco
A regulator’s decision not to grant merger authorisation for the sale of Suncorp Group’s lending business to Australia and New Zealand Banking Group (ANZ) has not dampened the insurer’s hopes that its divestment will push through – so much so that Suncorp’s head honcho does not want to think about the big ‘what if’ for now.
Queensland-headquartered Suncorp, which is seeking to let go of its banking unit to focus on being a major trans-Tasman insurer, held its earnings call on Wednesday in Sydney to present the company’s financial results for the year ended June 30, 2023. Suncorp’s group net profit after tax for FY23 amounted to AU$1.15 billion.
During the question-and-answer session, group chief executive Steve Johnston (seen above during his presentation) was asked at least twice about Suncorp Bank and what an analyst called a “realistic possibility” of it not being sold to ANZ following the Australian Competition & Consumer Commission’s (ACCC) authorisation denial.
“If there is no bank sale at all, could you comment on what the capex (capital expenditure) requirements might be for the bank,” one analyst asked.
In response, Johnston declined to entertain the “no bank sale” idea.
“I don’t want to get into precise scenario analysis because, as I mentioned in the presentation, we remain confident that the process will conclude through the [Australian Competition] Tribunal,” replied the group CEO, who said Suncorp Bank is in reasonable shape in a technology sense.
Johnston stated: “We will have to continue to incrementally invest in it alongside the insurance business if that were to be the scenario. But, again, I don’t want to get into precision around what that might look like.
“If, in fact, the outcome of the Tribunal was not what we hoped, then we’d certainly regroup around the strategy and work out how we take it forward… I don’t think now’s the time for us to be speculating around what that might look like. We will contemplate it if that were to be the case.”
Bendigo or Adelaide Bank?
When the ACCC announced its decision to block the ANZ-Suncorp deal over concerns that it could substantially lessen competition, the watchdog made particular mention of second-tier lenders Bendigo and Adelaide Bank.
“In considering the likely outcomes if ANZ does not acquire Suncorp Bank, the ACCC considers there are two commercially realistic potential scenarios; that Suncorp Bank largely continues as it is now or that it merges with or is acquired by a second-tier bank, specifically Bendigo and Adelaide Bank,” ACCC deputy chair Mick Keogh said at the time.
Keogh, whose camp carefully examined the possibility, noted: “After undertaking this intensive assessment, the ACCC considers that there is a realistic prospect of a Suncorp Bank transaction with Bendigo and Adelaide Bank. We know Suncorp has extensively considered the option of a transaction with Bendigo and Adelaide in particular.
“While we are not saying such a merger between Suncorp Bank and Bendigo and Adelaide Bank will definitely occur if the ANZ deal does not proceed, we consider it is sufficiently likely that it is necessary to consider this scenario as part of the ACCC’s assessment.”
For now, though, Suncorp remains confident about its deal with ANZ crossing the finish line.
When asked whether they would be willing to elevate the case further if rejected by the Tribunal, Johnston essentially indicated that they would cross the bridge when they got there.
“I’ll take it one step at a time,” he said. “Nothing we’ve seen in the process, to date, reduces our level of confidence. That’s not to presuppose the outcome of the Tribunal. They’ve got a job to do. They’ve got evidence to review. So, we’ll get through that step first and contemplate anything if that were to evolve.”
What do you think about this story? Share your thoughts in the comments below.
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
