Powered by MOMENTUM MEDIA
subscribe to our newsletter

Suncorp sells wealth arm for $45 million

The financial services group has announced that it is selling its wealth business for $45 million as it moves to simplify its offering.

Suncorp has confirmed that it has entered into an agreement for the sale of its Australian wealth business, Suncorp Portfolio Services Ltd (SPSL), to LGIAsuper. 

The agreement, which is dependent on regulatory approvals, is for a total consideration of $45 million (subject to standard completion adjustments). This includes a fixed amount of $26.6 million, plus regulatory capital. 

Suncorp has said that it will enter into an agreement with LGIAsuper to distribute Suncorp superannuation products to Suncorp customers for 18 months after completion of the sale. 

The new owner has also agreed to offer roles to approximately 130 employees currently employed by Suncorp Group who work directly (or indirectly) within the wealth business. 

Advertisement
Advertisement

It is expected that Suncorp’s wealth business, which is estimated to have approximately $6.4 billion in funds under administration and around 137,000 members (as at 31 December 2020), will be merged with another Queensland-based fund, Energy Super, as part of a separate deal that LGIAsuper is progressing towards.

If that deal is approved, the combined Suncorp/Energy Super business will have around $28 billion in funds under administration and approximately 250,000 members. 

The expected completion date for the transaction is the second half of the 2021-22 financial year, 12 months after LGIAsuper’s planned merger with Energy Super on 1 July 2021.

The move by Suncorp to exit the wealth business follows a strategic review of the group’s wealth position, which commenced in February 2020, and continues the “simplification” of the Suncorp Group portfolio and a renewed focus on home lending.

According to Suncorp Group CEO Steve Johnston, the sale was a “good outcome” for Suncorp’s 137,000 superannuation members.

PROMOTED CONTENT


When I was appointed CEO, I said I wanted to align everyone at Suncorp around improving the way we deliver for our insurance and banking customers,” he said.

“This approach is already delivering results, and the wealth sale will allow the bank team to focus exclusively on the priorities we outlined at the interim result in February.” 

Clive van Horen, the CEO of Suncorp’s banking and wealth divisions, commented: “After extensive engagement with a number of potential acquirers, we believe that LGIAsuper is best placed to deliver sustainable member outcomes.

“The values and purpose of LGIAsuper, which is also headquartered in Queensland, align closely with those of Suncorp. This transaction will also enable the combined business to take advantage of size and scale benefits.” 

LGIAsuper CEO Kate Farrar suggested that the Suncorp acquisition would ultimately provide “significant advantages” to both current and future members of LGIAsuper, Energy Super and Suncorp’s superannuation business.

“This acquisition, combined with the Energy Super merger, will achieve an ideal, sustainable fund size, while maintaining our status as a boutique and personal superannuation provider,” Ms Farrar said.

“With the superannuation industry consolidating rapidly, we want to see our Queensland-based funds thrive in an increasingly complex and competitive national market, and the best way to do that is together.”

Ms Farrar added that LGIAsuper planned to keep the Suncorp fund operating as a standalone entity under the Suncorp brand initially, with its own trustee board, management and team.

“Suncorp’s superannuation members will not see any short-term changes to their fund or the team members who support them,” she said.

“In the medium term, we plan to mutualise and put the ownership of the fund in the hands of all members.”

Banks continue to move out of wealth

Suncorp’s wealth exit follows on from similar moves made by other banks, as they “simplify” their offerings to focus on core banking and lending services.

For example, Westpac sold its financial advice business in 2019, its insurance business last year and its LMI business last month as it moved to simplify its structure. The major bank also recently merged its consumer and business divisions as part of its simplification strategy.

Similarly, NAB recently offloaded its wealth business, MLC Wealth, in a $1-billion sale to IOOF, while CBA sold a 55 per cent interest in its superannuation and investment business Colonial First State (CFS) to global investment firm KKR last year, and ANZ offloaded its life insurance business, OnePath Life, to Zurich Financial Services Australia (Zurich) in 2019.

Many lenders announced plans to move out of wealth, super and insurance offerings following the banking royal commission and its resulting court cases, which saw many wealth businesses lose profitability and increase risk.

[Related: Suncorp to withdraw from personal lending]

Suncorp sells wealth arm for $45 million
Suncorp sells wealth arm for $45 million
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

OPINION: Debt-to-income ratio limits: do they help, or hinder? With the average property in Australian capital cities now over $700,000, l...

The Treasurer has met with regulators to discuss the housing market and consider whether “carefully targeted and timely adjustments” ...

The platform has become the first private sector exchange accredited under the ​​Trusted Digital Identity Framework. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.