Suncorp restructure could signal split
Suncorp’s proposed move to a non-operating holding company structure has added to speculation that the group’s bank is being primed for sale – a move analysts say must happen.
If nothing else, the announcement last week that it is considering a restructure diverted some attention from a worsening bad debt outlook for the 2009 financial year.
The financial services giant’s troubled banking arm last week raised its bad debt guidance from $687 million to $798 million for the full year to June 30, and warned the results could even be worse than forecast.
Last month Suncorp announced it would separate assets like commercial property lending and leasing finance into a non-core portfolio and wind back participation in that market. The portfolio is worth $16.8 billion and will be run down over the next five years as Suncorp moves to residential property, personal and small business lending.
Morningstar analyst David Walker says the proposed restructuring shows an intriguing shift in thinking by the board, although it does not suggest imminent action.
“It is curious in one sense, in that the chairman has said firmly that the business model the new CEO [who has yet to be appointed] will be taking forward is the current one, which is based on three diversified financial services divisions. Then this happens.
“At this stage it’s only a proposal. It has to go through regulatory and shareholder approval. There won’t be another update until September, so we need to keep our cool about this.”
Mr Walker says the evolution of Suncorp as a company specialising in insurance would be welcome as the current bancassurance business model failed years ago.
JP Morgan analyst Siddharth Parameswaran says a new structure for Suncorp will make a sale of the bank easier to achieve, but it could be done with the present structure anyway.
“The simplified structure makes a lot more sense in that the bank can’t bring all the other businesses undone if you move toward a non-operating holding company structure,” he told insuranceNEWS.com.au.
“It does make the spinning-off of the bank, or at least recognition of its value, a bit easier under that scenario.”
If nothing else, the announcement last week that it is considering a restructure diverted some attention from a worsening bad debt outlook for the 2009 financial year.
The financial services giant’s troubled banking arm last week raised its bad debt guidance from $687 million to $798 million for the full year to June 30, and warned the results could even be worse than forecast.
Last month Suncorp announced it would separate assets like commercial property lending and leasing finance into a non-core portfolio and wind back participation in that market. The portfolio is worth $16.8 billion and will be run down over the next five years as Suncorp moves to residential property, personal and small business lending.
Morningstar analyst David Walker says the proposed restructuring shows an intriguing shift in thinking by the board, although it does not suggest imminent action.
“It is curious in one sense, in that the chairman has said firmly that the business model the new CEO [who has yet to be appointed] will be taking forward is the current one, which is based on three diversified financial services divisions. Then this happens.
“At this stage it’s only a proposal. It has to go through regulatory and shareholder approval. There won’t be another update until September, so we need to keep our cool about this.”
Mr Walker says the evolution of Suncorp as a company specialising in insurance would be welcome as the current bancassurance business model failed years ago.
JP Morgan analyst Siddharth Parameswaran says a new structure for Suncorp will make a sale of the bank easier to achieve, but it could be done with the present structure anyway.
“The simplified structure makes a lot more sense in that the bank can’t bring all the other businesses undone if you move toward a non-operating holding company structure,” he told insuranceNEWS.com.au.
“It does make the spinning-off of the bank, or at least recognition of its value, a bit easier under that scenario.”