Suncorp has signed an agreement to sell its banking business to ANZ for $4.9 billion, focusing the company on its insurance operations in Australia and New Zealand.

“This proposal has been assessed through the lens of creating value for shareholders and, just as importantly, to ensure there is alignment of purpose and values and positive outcomes for our people and customers,” Suncorp Chairman Christine McLoughlin said today.

“Our purpose of building futures and protecting what matters – the focus of our company for over 100 years – will remain at our core and enable our people to deliver on our vision to create the leading Trans-Tasman insurance company.”

Group CEO Steve Johnston says the decision to divest the bank has not been taken lightly and has been informed by extensive analysis and consideration.

By combining with a larger group, the bank will be well positioned for the future while the insurance side will also benefit, he says.

“As a dedicated insurance business, we will be singularly focused on meeting the needs of our customers and communities at a time when the value of insurance has never been greater,” he said.

“We acknowledge the needs of insurance customers are rapidly changing, with a preference for digital interactions and for product design to take into account personal circumstances and risk profiles. At the same time, the external environment has seen more frequent and severe natural hazard events resulting in increased costs and affordability challenges.”

Completion of the deal is targeted for the second half of next calendar year, subject to regulatory conditions including approval from the Australian Competition and Consumer Commission and the Treasurer.

Suncorp says the transaction is expected to yield net proceeds of $4.1 billion.

More details will be provided in our afternoon bulletin.