Home News Australia’s ANZ to buy Suncorp banking arm for $3.3 billion, boost mortgage business

Australia’s ANZ to buy Suncorp banking arm for $3.3 billion, boost mortgage business

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The ANZ Bank logo was drawn on April 23, 2018 in Sydney, Australia. REUTERS / Edgar Su

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  • ANZ Raises A $ 3.5 Billion to Fund Transactions
  • ANZ withdraws from negotiations to buy MYOB group
  • Suncorp will return a majority of net income

July 18 (Reuters)-Australia and New Zealand Banking Group (ANZ.AX)Australia’s fourth home lender will purchase the banking division of insurance company Suncorp Group Ltd. (SUN.AX) For A $ 4.9 billion ($ 3.33 billion), keep a mortgage book and expand your geographic network.

The deal, agreed on condition of regulatory approval, shows how important mortgages are to the Australian banking sector, even if rising interest rates and pressure on living costs reverse the country’s real estate market.

ANZ said on Monday that it aims to raise A $ 3.5 billion by issuing new shares to pay for transactions, but home prices jump to a quarter of the year until early 2022. He missed most of the benefits of the COVID-19-led housing boom. According to analysts, this is to slow down the processing of the application.

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The acquisition will increase ANZ’s mortgage books by A $ 47 billion to A $ 307 billion, overtaking National Australia Bank Ltd. (NAB.AX) The third spot shows the published data.

ANZ shares were not traded as the bank was preparing to issue new shares. According to Filing, the new shares were sold for A $ 18.90 per share. This is a 12.7% discount on Friday’s closing price of ANZ $ 21.64.

Suncorp’s stock, which is trying to offload assets that are considered non-core, rose 5.7% against a wider market profit of 0.6%. Most of the sale price will be returned to shareholders.

Analysts have been cautious about trading, given the complexity and economic uncertainties of previous Australian bank acquisitions.

“The willingness to buy (ANZ) is a nuisance given the increased risk of recession and the poor performance of ANZ so far,” Jeffreys analyst Brian Johnson said in a client note.

“While MQG is pushing up deposit costs, ANZ’s core franchise is already struggling and appears to be becoming more complex,” he added, referring to Macquarie Group Ltd. (MQG.AX)..

ANZ CEO Shayne Elliott said the deal would create “a simpler and more powerful platform for advancing strategic ambitions” and “growth.”

“This acquisition is a historic step forward and the culmination of work that began seven years ago,” Elliott said in an analyst’s phone call, citing informal talks between lenders dating back to 2016.

In a May update, banks said rising interest rates could intensify competition and could try to increase profits outside the mortgage business. Last week, ANZ said it was in talks to acquire accounting software maker MYOB from private equity giant KKR & Co. (KKR.N)Strengthen its business lending capacity.

But earlier on Monday, ANZ said MYOB transactions were currently off, informing investors that banks would eventually continue to focus on mortgages. read more

The deal also represents a geographical expansion by Melbourne-based ANZ to the state of Queensland, where Suncorp is based and most of its businesses are located. According to the bank, ANZ will retain Suncorp’s Queensland personnel and branding for at least a few years, including financing infrastructure for the Olympic Games in Brisbane in 2032.

According to ANZ, the purchase price is 13.8 times the historical revenue of Suncorp’s banking sector, which is below the price-earnings ratio of Suncorp’s entire business, but within the range of major Australian banks.

The agreed price “reflects the efforts of our people and progress in achieving our strategic goals,” said Christine McLoughlin, Chairman of Sancorp.

($ 1 = 1.4734 Australian dollars)

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Report by Byron Kaye in Sydney and Sameer Manekar in Bangalore, and additional reports by Scott Murdoch. Edited by Daniel Wallis, Richard Chang, Kenneth Maxwell

Our criteria: Thomson Reuters trusts the principles.

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