It was with a distinctive mix of military and suburban references that new Suncorp CEO Patrick Snowball last week declared the group’s commitment to its banking operations.

In his first public speech in Australia since taking up the CEO’s position last month, he warned competitors to “get your tanks off our lawn” over the possible sale of the Metway Bank, which has been seen by many competitors as a drag on Suncorp’s other operations in general insurance, life insurance and wealth management.

Suncorp’s determination to continue with involvement in all the financial services sectors came in the same week as Dutch bancassurer ING announced plans to sell off its insurance operations and focus on banking.

Even though it has been a strong advocate for the model in the past, ING says the world now demands greater simplicity, reliability and transparency than the bancasssurance model can provide.

German insurance giant Allianz is another to have been bitten by bancassurance. It bought Dresdner Bank in 2001 for about €24 billion ($38.9 billion) and offloaded it seven years later for €9.8 billion ($15.8 billion) after pumping billions more into it.

So what’s holding Suncorp’s new boss back from getting rid of the bank from what is already a large and complex group? Well, for starters, while the bank’s long-term deposit and debt ratings remain a concern, government guarantees for the banking sector have eased the pressure.

And then there’s the Australian Competition and Consumer Commission’s (ACCC) stated opposition to any more takeovers of regional banks by the big four banks. According to JP Morgan analyst Siddharth Parameswaran, the ACCC factor is probably the main reason why Mr Snowball has taken the “for sale” signs off Suncorp’s lawn.

But at Credit Suisse, analyst Arjan van Veen says to stay tuned, because there’s always an important distinction between “core asset” and “not for sale”.

“Maybe in two years’ time an HSBC or whoever will be looking to expand in Australia; that’s the time to sell,” he told insuranceNEWS.com.au.

The bancassurance model has always been controversial, with the synergies that it promises through cross-selling emerging as a good idea in buoyant economic times.

The Suncorp operation was set up between 1996 and 1999 with the bank in the middle of it. Things have become more complex since then – like the pricey Promina acquisition and Metway Bank’s appetite for local commercial property business at the top of the market.

Plainly, the bancassurance model hasn’t worked too well for Suncorp. Morningstar analyst David Walker told insuranceNEWS.com.au that in Suncorp’s case there has not been even mild evidence that it’s worth the time and trouble.

“Our concern is, how does the CEO find time to manage three different businesses – banking, general insurance and life insurance/wealth management – and are there any synergies from the three being in one group?”

Ibisworld analyst Richard Jeremiah says he doesn’t like Suncorp’s chances of pulling off such a difficult business model. He says the group “is obviously struggling with some of the distractions that happen when you try and integrate things into a fully functional business”.

Mr Parameswaran notes Suncorp lacks the branch coverage to make bancassurance work nationally.

“Arguably it works okay for Suncorp in Queensland because they sell insurance and banking with the same brand and it’s quite a strong brand there,” he said.

Mr van Veen says Suncorp’s position on the bank does not preclude bits and pieces being sold off.

“The bank is core to the group, but that’s not to say they won’t sell the lease finance book, and at the Bank of Queensland result last week anyone who cared to listen would have heard they are very interested in the lease finance book in Suncorp,” he said. “And the agribusiness within Suncorp is a very distinct business and they could sell that tomorrow to Rabobank.”

Major banks, with their recent appetite for insurance/wealth management acquisitions, are proof that the bancassurance dream is far from over.

NAB, with its newly acquired chunk of Aviva, and ANZ which took over ING’s Australian insurance business joint venture will naturally be exploiting cross-selling opportunities across their vast networks.

But critics will no doubt argue that a lack of specialist focus will dampen their prospects, as will the competition between corporate divisions for capital for product development and growth.

With a strong insurance person like Patrick Snowball at the controls, time will tell if the core bank will come to symbolise achievement or missed opportunities.