ANZ Banking Group will buy Suncorp Bank for $4.9 billion, with plans to bring retail customers to the ANZ Plus platform, while giving business customers access to more ANZ products.
Suncorp Bank’s retail customers will be migrated to ANZ Plus, the nascent retail banking platform developed by ANZ as part of its ANZx transformation.
Meanwhile, Suncorp Bank business customers will be offered a wider product selection, with access to ANZ GoBiz, which integrates with accounting software for fast business loans and overdraft approvals.
ANZ’s intention to transition retail customers to ANZ Plus ends Suncorp Bank’s long-running core upgrade saga.
In 2020, Suncorp Bank ended a long-running attempt to replace its Hogan core banking system with an Oracle-based platform.
At the beginning of this year, iTnews reported that Suncorp Bank would instead upgrade Hogan, a project then in its infancy.
The sale of Suncorp Bank to ANZ now opens up new opportunities for basic transformation.
ITnews was seeking clarification on these options at the time of publication.
On a call with analysts, Suncorp CEO Steve Johnston noted that among the merits of the transaction “serves to benefit Suncorp customers and staff in the region, with customers being able to benefit from the many technology initiatives that ANZ currently has in development”.
Twin brand strategy
On the separate ANZ investor call, CEO Shayne Elliott said the acquisition means the bank will gain “1.2 million customers, a 20% increase for ourselves here in Australia, a great management team, a culturally aligned company and…the platform for growth”.
“Operationally, once complete, we will initially run Suncorp Bank as a separate business, retaining the current brand,” Elliott said.
“We have licensed this brand for a minimum of five years, allowing us to consider longer term branding options – whether that is a full conversion to ANZ or possibly launching a new Mark.”
Elliott said that after ANZ’s 2003 acquisition of Bank of New Zealand, the two “operated as two brands, two systems, two of everything for 10 years”.
“After the [global financial crisis] the decision has been made to merge the two businesses and systems under the ANZ brand,” he said.
“We have invested heavily behind the ANZ brand to elevate it to a level similar to National Bank and they have worked very hard to remove any friction for customers as they migrate through [National Bank of New Zealand] at ANZ.
Elliott said he was “not suggesting for a minute that we should wait 10 years between completion [of the Suncorp Bank buy] and make this movement”.
“We’ve learned a lot, so we think we can do this much, much faster, but the first thing we have to do is make the decision – is switching to the ANZ brand the right thing to do? ?” he said.
Although Suncorp did not disclose the technology costs likely to arise from the acquisition, Chief Financial Officer Jeremy Robson told the analyst that the sale would result in “stranded costs” before completion of approximately $40 million. and “in various corporate support functions, including technology”.
Total integration costs over the next three years will exceed $400 million, and Suncorp’s sales documents show a longer-term allowance for an additional $240 million in integration costs, with technology likely a sub -all of this.
“Part of the complexity of removing stranded costs is that they go vertically through an organization,” Robson said on the investor call.
“To some extent, they rely on systems, non-entity costs, licensing agreements, and other activities where you have to work through the licensing transition” from organization to organization. other.
iTnews will update this story as more details on ongoing investor and media calls become available.