Suncorp sweetens bank sale with deal to keep Brisbane HQ

Suncorp Group has promised to still call Queensland home if its $5bn bank sell off to ANZ is approved, and return a billion dollars to mum and dad investors.

Almost half of Suncorp’s retail shares are owned by Queenslanders.

Suncorp Group will return about $1 billion to its more than 158,000 mum and dad retail shareholders - almost half of them Queenslanders - as part of the proposed $4.9bn sale of its bank to ANZ.

The planned sweetener comes as Suncorp said it will continue to hang out its head office shingle in Queensland after hammering out an agreement with the State Government over its future following the potential bank sale, that is still subject to regulatory approval.

Suncorp chairman Christine McLoughlin said the agreement would see the group focused solely on expanding its insurance business as a Queensland-headquartered company, hiring more Queenslanders and investing in a new disaster response centre.

State Government support for the deal, which still needs approval from the ACCC, was essential as the original Suncorp-Metway Act that created the banking and insurance group in the 1990s required the company’s headquarters and chief executive to be based in Queensland. That law will now amended to take account of the banking operations being sold to ANZ.

Ms McLoughlin said the ANZ acquisition would leave Suncorp free to expand as a pure insurance group.

“The benefits to Suncorp is that we will have less capital constraints and that will allow us to leapfrog in terms of growth opportunities,” Ms McLoughlin said.

She said Suncorp had already committed to return excess capital from the deal to shareholders. The sale is expected to yield net proceeds of $4.1bn, representing $3.21 per share.

As a cash sale, shareholders will benefit from a return of over $4bn distributed across the broad base of Suncorp shareholders.

This will include a return of up to $1 billion distributed to Suncorp’s more than 158,000 mum and dad retail shareholders.

Almost half of Suncorp’s retail shares are owned by Queenslanders. 

More than 67,000 Queenslanders have invested directly in Suncorp.

Ms McLoughlin declined to say how the funds would be returned to shareholders as that would have to be determined by the board. “ANZ is paying us cash and that gives us a lot more options than if we were being paid in scrip,” Ms McLoughlin said.

More than 67,000 Queenslanders have invested directly in Suncorp with a combined shareholding of more than 161 million shares.

She said the legislative requirements to keep Suncorp Group HQ in Queensland did not necessarily ringfence the company from a takeover from another group based outside the state. “If we have another company approach us (about a takeover) we will have to go through the process of looking at the interests of the various stakeholders,” Ms McLoughlin said. “We just can’t contract out of our fiduciary duties as a board.”

Suncorp said the sale of the bank comes at a time when insurance businesses in Australia

face significant challenges given volatility in global reinsurance markets and

increased insurance capital requirements. It said simplifying the group as an organisation would allow for greater focus on Suncorp’s insurance business, products and services at a time when there are increasing affordability for customers.

Queensland Treasurer Cameron Dick said the government was determined to ensure any deal would see more jobs in the financial services sector in Queensland.

“The agreement formalises Suncorp’s commitment to keep its insurance corporate headquarters in Queensland,” said Mr Dick.

“There has been media speculation about other potential suitors for Suncorp’s banking assets. Our Government takes no position on that, other than to say this: This agreement with Suncorp and ANZ sets a benchmark. It is our firm expectation that any other transaction would deliver a package of benefits of equal or greater benefit.”

Christine McLoughlin