ANZ acquires Suncorp: what it means for you
Financial earthquake as ANZ announces it will buy another major Australian bank for $4.9bn: Here’s what it means for customers
- ANZ buys Queensland bank Suncorp for $4.9bn to grow its home lending profile
- A major bank has pledged to keep Suncorp branches open for three years
- The deal marks the biggest takeover since Westpac bought St George in late 2008
- ANZ buys Suncorp Bank from Suncorp Group but not Suncorp Insurance
- ANZ shares have been suspended as it embarks on a fundraising
- Suncorp shares jumped 6.49% to $11.82 in the first half hour of trading
ANZ will buy smaller rival bank Suncorp for $4.9bn in a bid to take a bigger share of Australia’s home lending market – marking the country’s biggest banking deal in 14 years.
Suncorp customers might see little difference in short-term services, with ANZ pledging to keep the company’s bank branches open in Queensland, where the bank opened, for at least three years.
ANZ, one of Australia’s big four banks, has also licensed the Suncorp name for five to seven years, meaning bank branches will remain under that name for some time to come.
ANZ buys Suncorp’s banking arm, but not its insurance arm, with ANZ embarking on a $3.5 billion fundraising drive from its shareholders to help fund the deal.
ANZ made a major move on Monday – announcing it would buy rival bank Suncorp for $4.9 billion
ANZ chief executive Shayne Elliott said: “The acquisition of Suncorp Bank will be a fundamental investment for ANZ and a vote of confidence in Queensland’s future.”
ANZ acquires Suncorp
ANZ buys Suncorp Bank for $4.9 billion, a $1.3 billion goodwill premium to net tangible assets
ANZ on commercial hiatus in Australia and New Zealand until July 21 as it embarks on a $3.5bn fundraise from its shareholders
ANZ promised not to close Suncorp Bank branches or lay off staff for three years
ANZ also pays licensing fees to use the Suncorp name for at least five years at an average cost of $10 million per year.
“With much of the work to simplify and strengthen the bank complete and our digital transformation well advanced, we are now in a position to invest and reshape our Australian business.
“This will result in a stronger and more balanced bank for customers and shareholders.”
Suncorp said its insurance operations in Australia and New Zealand would not be part of the ANZ deal, adding that its group headquarters would remain in Queensland.
ANZ’s cash purchase of Suncorp Bank for $4.9 billion represented a $1.3 billion goodwill premium to Suncorp’s net tangible assets.
The news caused Suncorp’s share price to rise 6.49% to $11.82 in the first half hour of trading on the Australian Securities Exchange, as the S&P/ASX200 broad rose 0.75%.
ANZ shares have been suspended until July 21 in Australia and New Zealand as it embarks on a $3.5 billion fundraising.
Shareholders will be entitled to one new ANZ share for every 15 ANZ shares they hold on July 21 at 7 p.m. Melbourne time.
Suncorp customers may see little difference in short-term services, with ANZ pledging to keep the company’s bank branches open for at least three years (pictured is a branch in Brisbane)
Suncorp will also be run as a separate banking entity for three years, with ANZ pledging not to lose net jobs or close branches in Queensland for three years after the deal closes.
Clive van Horen will remain as chief executive of Suncorp Bank, reporting to Mr Elliott and will join ANZ’s executive committee once the transaction is complete.
As part of the deal, ANZ will pay Suncorp Group a five to seven year royalty to use its name.
This means ANZ will pay a minimum fee of $50 million to use the Suncorp Bank brand, with an average of $10 million per year under a brand licensing agreement between Suncorp Group and ANZ.
If this license agreement is extended, Suncorp will receive an additional royalty of $10 million per year.
Suncorp President Christine McLoughlin said: “This proposal has been evaluated with a view to creating value for shareholders and, equally important, ensuring the alignment of goals and values and positive outcomes for our employees and our customers.”
As part of the deal, ANZ has pledged to allocate $15 billion in new loans to support Queensland’s renewable energy projects and Olympic Games green infrastructure over the next decade.
ANZ’s acquisition of Suncorp marks the biggest takeover of a small bank by any of the Big Four since Westpac acquired St George in December 2008.
ANZ chief executive Shayne Elliott said: ‘The acquisition of Suncorp Bank will be a fundamental investment for ANZ and a vote of confidence in Queensland’s future’
Gail Kelly, then chief executive of Westpac, previously ran St George, which in 1997 bought Advance Bank.
In 2008 Commonwealth Bank bought Perth-based lender BankWest and in 2013 took over mortgage brokerage Aussie Home Loans, which was established by John Symond in 1992.
ANZ will need approval from the Australian Competition and Consumer Commission to proceed with the acquisition of Suncorp Bank.
Australia’s largest bank acquisitions in the past 25 years have taken place during the first term of a new federal government.