The bank sale might help Suncorp focus, but will investors close a historical discount against its insurance rival IAG?
Suncorp has pledged to focus on improving its insurance arm after agreeing to sell its bank – a division in the gunsight of investors since the financial conglomerate’s birth in 1996 – to ANZ Banking Group.follows a series of asset sales from Brisbane-based Suncorp in the past three years, including a life-wealth management division and smash repair venture.
Suncorp says the sale of the banking arm will allow it to focus on insurance, affected by disasters like flooding this year.The remaining main engine is Suncorp’s insurance arm, whose brands include AAMI and Apia. It competes as the top home and motor insurer with IAG, whose brands include NRMA. “It will … allow us to really focus in on our insurance business and the challenges and opportunities that are there in insurance at the moment around climate change, frequency and severity of weather, making sure that we get all those people back into their homes,” Suncorp chief executive Steve Johnston said on Monday of the bank sale.The financial conglomerate was created through the merger in 1996 of Queensland state-owned entities QIDC and insurer Suncorp with the listed Metway Bank.
Even that was controversial because the deal torpedoed an attempt that year by St George Bank to take over Metway Bank in a $790 million dealSince then, investors and investment bankers have often focused on whether owning a bank and insurance business together is effective and whether cross-selling of such products – known as “bancassurance” – really works.The cross-selling experiment never gripped customers or investors in the 2000s.
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