After an extended lull following the announcement of Suncorp’s agreement to sell its bank to ANZ in July, the sale process will start to move forward in the next few weeks.
The Suncorp executive responsible for enabling the transition, group executive completion and transition Belinda Speirs told an investor briefing yesterday that the parties are currently engaging with the Australian Competition and Consumer Commission and anticipate that the application will be published in the coming weeks.
The parties also have to get approval from the Treasurer and secure amendment or repeal of Queensland’s State Financial Institutions and Metway Merger Act.
Speirs said: “We are engaging with the Queensland government. Our continuing commitment to Queensland will be reflected in our headquarters remaining in Brisbane. We are also looking at a potential disaster event response centre.”
Speirs said that if approvals are obtained, the parties anticipate completion in the second half of calendar 2023, which was the timeline given when the deal was announced.
She said ANZ and Suncorp have already developed a joint transition plan.
“The separation strategy is to transition all of the core Suncorp capabilities required to operate the bank to ANZ on day one. This includes all relevant employees, dedicated technology such as Hogan and Oracle, various contracts and dedicated premises.”
After completion, a service agreement will cover shared systems and premises for two years, with the potential to be extended for one year.
ANZ will be able to use the Suncorp Bank trademark for five years, with the potential for a two-year extension.
Suncorp chief financial officer Jeremy Robson said the terms of the deal have not changed since it was announced. ANZ will pay a cash consideration of around A$4.9 billion based on a premium to net tangible assets of 1.35 times.
Suncorp expects the net proceeds to be around $4.1 billion after transaction and separation costs, provisions and capital impacts of $500 million and capital gains tax of around $330 million.
Robson said the majority of proceeds will be returned to shareholders in the form of a franked special dividend and a pro rata return of capital.
“We are already engaging with the ATO to make that process as efficient as possible,” he said.
Asked at the briefing whether there were performance conditions attached to the transaction, such as customer retention, Suncorp Bank chief executive Clive van Horen said: “There are no such conditions”
He said the bank was continuing to deliver on its strategy and performing well.
The investor briefing included a September quarter update for the bank. Home loan growth picked up during the quarter, with the loan book growing by 3.3 per cent – 3.1 times system.
van Horen said the above-system home loan growth has not come at the expense of margin or credit quality.
The proportion of loans originated during the quarter at loan-to-valuation ratios above 80 per cent was 9 per cent, compared with 10 per cent in the previous quarter and 11 per cent in the one before that. Debt-to-income ratios also trended down.
Home loan arrears fell during the quarter.
The net interest margin during the quarter was 1.99 per cent – above the bank’s target range of 1.85 to 1.95 per cent.
van Horen said he expected the margin to stay above the target range for the rest of the 2022/23 financial year.