Suncorp confirmed on Monday that it was looking at the future of its banking business, but at the same time, it attempted to put a lid on speculation.
Media reports Sunday and Monday suggested that the Brisbane-based financial services group was making a fresh push to spin off or sell its banking unit and focus on its insurance arm brands.
The justification was the usual – to boost returns for shareholders, although thanks to years of storms, huge claims for climate change related events such as heavy rain, floods and hail, the insurance game in Australia is strewn with red ink or small profits.
Suncorp’s regional banking business is based in Brisbane and is based on the old Metway Bank.
The media reports claimed it could be worth $5 billion. That’s roughly what a bigger rival in Bendigo and Adelaide Bank is current valued at by the market.
Suncorp is valued at $13.7 billion. Its shares closed Friday at $10.84.
Suncorp shares were up more than 2.5% to $11.12 in early trading Monday.
In a short statement to the ASX on Monday, Suncorp merely said:
“As previously advised, Suncorp, from time to time, reviews its strategic alternatives in relation to all of its businesses and is currently doing so in respect of its banking operations.
Suncorp’s attempts to sell the bank would be controlled by the competition regulator, the ACCC and by the key financial regulator, APRA.
The most logical buyers would be one of the big four – the Commonwealth, Westpac, NAB or ANZ – but they would not be allowed to buy because it would see a loss of competition in banking services.
As well there would be an outcry from consumers and others about a reduction in competition.
APRA and the Reserve Bank would be reluctant to sign off on any of the big four buying the Suncorp bank because it would add to concentration and make the financial system that much more exposed and riskier.
