Suncorp lifts bonuses in bid to keep execs after bank sale

Suncorp’s board has suffered a barrage of shareholder criticism over the handling of its bank sale to ANZ.

Steve Johnston, Suncorp Group CEO, Christine McLoughlin AM Suncorp Group Chairman, Paul OÕSullivan ANZ Chairman, and Shayne Elliott, ANZ CEO pictured addressing the media at Suncorp, Brisbane 18th July 2022. TheyÕve just announced that ANZ will buy out the banking arm of Suncorp bank. (Image/Josh Woning)

Suncorp’s board has fielded a barrage of shareholder criticism over its handling of the sale of its bank to ANZ and moves to tinker with bonus plans for executives.

Shareholders lined up to lob shots at Suncorp’s board over its bank sale at Friday’s annual shareholder meeting, questioning why the move had not been put to a vote.

But Sydney-based Suncorp chair Christine McLoughlin told investors no vote was needed.

“The relevant regulator on this question is the ASX Australian Stock Exchange and they confirmed that no vote was required under this new rule,” she said.

“The board reviewed the proposal from ANZ in line with our fiduciary duty to assess all options that may be in shareholders best interests”

Ms McLoughlin in her opening address told investors the board had moved to sell the bank as it was in investors’ best interest.

“Overall, we are confident the sale will result in a stronger insurance and banking system for Queensland and Australia,” she said.

Suncorp announced plans in July to sell its banking arm to ANZ in a $4.9bn deal that will yield net proceeds of $4.1bn for the company. ANZ will also pay a further $50m to Suncorp over five years for the use of the Suncorp bank brand.

As part of the deal ANZ agreed to no job cuts in Queensland or branch closures for at least three years.

Shareholders were also asked to approve Suncorp’s incentive plans for executives “given the announced sale of the bank”, noting the deal was taking place in an “extremely competitive environment for talent”.

Suncorp secured shareholder approval to waive the performance conditions on 40.1 per cent of performance rights from 2021 and waive another 55.5 per cent for 2022 in a bid aimed at keeping executives with the company into 2025.

Suncorp Group chief executive Steve Johnson said the company was struggling to get staff and keep them in a “war for talent that has been more extreme than we’ve seen probably in our lifetimes”.

He said in aggregate wages were up around 7 per cent on a full year basis after Suncorp completed a review of pay across the business.

The bank’s sale is still subject to approval from the Australian Competition and Consumer Commission and will require an amendment to Queensland’s State Financial Institutions and Metway Merger Act 1996, which requires Suncorp keep its head office and key executives in Queensland.

“Suncorp will have a singular focus as a dedicated, Queensland-head-quartered, leading Trans-Tasman insurer at a time when the value of insurance has never been greater,” Ms McLoughlin said.

The sale of the bank will strip out an arm of the business which delivered $368m in profit for Suncorp in the 2022 financial year.

That was compared to Suncorp’s insurance arm which returned $174m in profits after massive losses from natural catastrophes.

Ms McLoughlin said Suncorp would distribute the excess profits from the sale after it had set aside what would be needed to strengthen the insurance business.

“Regulatory costs continue to be a significant impost in running banking and insurance businesses,” she said.

“Throughout the year Suncorp continued to implement the complex regulatory change agenda, aimed at improving customer outcomes. This has necessitated changes across the entirety of our business which comes at a cost.”

But Mr Johnson said Suncorp was pushing forward with a “comprehensive pricing response” aimed at meeting inflation and protecting margins.