ANZ off chasing the SUN

ANZ Bank (ASX:ANZ) has confirmed that it proposes to buy Suncorp’s (ASX:SUN) banking business for $4.9 billion and will ask its shareholders to cough up $3.5 billion via a one for 15 fully underwritten renounceable issue.

The issue will be made at $18.90 a share, a 12.7% discount to the last sale for ANZ shares of $21.47 on Friday. Trading in ANZ shares will be halted until July 21 to get the bulk of the raising done with big shareholders.

ANZ said that Suncorp Bank will continue to be led by current CEO Clive van Horen who will report to ANZ CEO, Shayne Elliott and join ANZ’s Executive Committee post completion.

Suncorp Bank will initially operate under its existing Authorised Deposit-taking Institution licence with no changes to the total number of Suncorp Bank branches in Queensland for at least three years from completion.

In buying Suncorp Bank, ANZ says it will get $47 billion in home loans with strong risk profile, $45 billion in high-quality deposits and $11 billion in commercial loans.

ANZ CEO Shayne Elliott said it would allocate $15 billion of new lending as part of “ANZ’s existing renewable lending commitments to support Queensland renewable projects and green Olympic Games infrastructure as well as $10 billion of new lending for energy projects particularly those targeting bioenergy and hydrogen over the next decade.”

Mr Elliott said in Monday’s statement that “The acquisition of Suncorp Bank will be a cornerstone investment for ANZ and a vote of confidence in the future of Queensland.

“With much of the work to simplify and strengthen the bank completed, and our digital transformation well-progressed, we are now in a position to invest in and reshape our Australian business. This will result in a stronger more balanced bank for customers and shareholders.

“We have admired the transformation that has occurred under the leadership of Steve Johnston and Clive van Horen and believe Suncorp Bank is a natural fit with ANZ given its culture, risk appetite and customer focus.

“ANZ has licenced the Suncorp Bank brand for five to seven years and we are committed to maintaining its current branch footprint in Queensland for at least three years post completion.”

But the success or otherwise of the deal depends on regulatory approvals.

In a small print foot note in the announcement ANZ pointed out that it has given itself up to 24 months (two years) to obtain the approvals.

“The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State Financial Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions is 24 months after signing (after which either party may terminate the agreement).”

In a trading update, ANZ said it expects to pay a September 30 half final dividend of 72 cents a share, unchanged from the interim for 2021-22 and the final for 2020-21.

“ANZ Chief Executive Officer Shayne Elliott said: “This was a pleasing quarter where all our businesses performed, particularly our home loan business in Australia.

“While rising inflation and interest rates are starting to impact some customers, household and business balance sheets remain strong and with a collective provision balance of $3.8 billion we are well- placed to continue to support economic growth into the future,” Mr Elliott said in the update.