Hayne findings could hit ANZ’s IOOF deal

As the banking and financial services sector prepares for the Hayne royal commission report to be made public today, deal-makers are nervously waiting to assess the impact the findings could have on corporate transactions.

The deal being closely watched is IOOF’s agreement to buy ANZ’s OnePath business, which has been in the works for more than a year.

The unprecedented decision by APRA to pursue IOOF chief executive Chris Kelaher, chairman George Venardos, chief financial officer David Coulter, company secretary Paul Vine and general counsel Gary Riordan is still playing out with the case due to be heard in the Federal Court in July.

To that extent, it’s not surprising there is speculation that the OnePath acquisition won’t go ahead.

The question is whether ANZ can find another buyer at the price it wants.

The OnePath sales campaign, carried out by Goldman Sachs, was one of the first wealth business sales by the Australian retail banks.

NAB has sold its MLC Life Insurance business to Nippon, and since then CBA offloaded CommInsure to AIA for $3.8 billion, Suncorp has sold its life business to Dai-ichi for $725 million, while AMP has struck a controversial deal with Resolution Life on its assets.

ANZ has said it is prepared to give IOOF time to deal with the APRA accusations, but observers say the bank risks locking itself out of the market for a buyer the longer it waits.

The appetite of IOOF to press on with such a major deal when its business and future is in disarray is also starting to be questioned. Some sources say the scandal-plagued business needs a total refresh to ensure its viability. The company’s share price has fallen from a peak of $9.34 last year to $5.11.

Meanwhile, CBA has played down observations that its AIA deal is looking suspicious given it has been under way for more than a year and is yet to be approved. The bank has indicated the final step is to receive sign-off from Chinese regulators, which is likely soon.

On the equity markets, global investors have been preparing themselves for the royal commission results over the past quarter by increasing their short positions in the major Australian banks.

A Macquarie report found that short interest positions in the bank increased from $3.3bn to $5.3bn, which was blamed on the royal commission and New Zealand unexpectedly raising capital requirements last year.