ANZ Bank is set to become Australia’s third-largest life insurer after negotiating a $1.87 billion buyout of its joint venture with ING Group.

On Friday the banking giant announced the acquisition of ING Group’s remaining 51% shareholdings in the ANZ-ING wealth management and life insurance operations in Australia and New Zealand.

The deal will see ING Australia and ING NZ become wholly owned subsidiaries of ANZ.

On completion, ANZ will become the third-largest player in the local life insurance market, while the deal also strengthens its retail funds management presence in both countries.

ANZ expects significant gains from revenue and cost synergies associated with full ownership of the “well managed and profitable” businesses.

“It also gives us the flexibility to pursue further growth opportunities over the medium term without the constraints of a joint venture structure and supported by a well capitalised parent company,” CEO Mike Smith said.

ANZ claims the ownership transition will “not disrupt staff, customers or adviser channels”. The businesses employ more than 2700 staff.

ING Australia CEO Harry Stout and ING NZ CEO Helen Troup will continue in their existing roles. The ING brand will continue for 12 months while future branding is examined.

Completion of the deal is forecast for the fourth quarter subject to regulatory approval in both countries.

As ANZ ramps up its stake in the local life insurance market, Aviva Australia is heading for the exit. This week the UK life insurance giant is expected to finalise its $825 million deal with National Australia Bank, ending more than 100 years in the local market.