ANZ to buy Suncorp’s banking arm for $4.9 billion

ANZ Bank has signed a deal to buy Suncorp’s banking arm for $4.9 billion, as the big four lender looks to expand in the lucrative retail banking market and increase its exposure to Queensland.

ANZ shares were put into a trading halt on Monday morning, as the bank said it would seek to raise about $3.5 billion in new equity to help fund the all-cash purchase, which will bring about $47 billion in home loans to ANZ.

Under the deal, Suncorp’s banking arm will continue to operate under the Suncorp brand for five years, and it will continue to be led by its current chief executive Clive van Horen, who will report to ANZ chief executive Shayne Elliott.

Elliott said ANZ had also committed to not closing Suncorp branches in Suncorp’s home state of Queensland for at least three years from when the deal is completed, and ANZ also pledged there would be no job losses in Suncorp’s bank in Queensland for at least three years.

“The acquisition of Suncorp Bank will be a cornerstone investment for ANZ and a vote of confidence in the future of Queensland,” Elliott said.

“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.”

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The deal, which comes after ANZ’s retail banking business has struggled in recent years due to delays in its mortgage processing, is targeted at bulking up ANZ’s presence in the home loan market, where it is the fourth-biggest lender in the country. The acquisition includes $47 billion in home loans, $45 billion in deposits and $11 billion in commercial loans.

Suncorp owns some of the largest insurance brands in the country including AAMI, GIO, Shannons and Apia, and the sale of its bank will turn it into a pure-play insurance company, something some investors have long supported.