Acquiring the business could add nearly $60 billion to NAB's loan book
National Australia Bank expressed interest should Suncorp Group seek to sell its bank.
NAB’s leadership has reportedly notified top brass at Suncorp that they’re interested in the regional bank should it become available, according to The Australian Financial Review.
Acquiring Suncorp could add nearly $60 billion in loans to NAB’s balance sheet, AFR reported. It would also bolster NAB’s presence in Queensland, Australia’s third-largest retail banking market.
Offloading the bank would leave Suncorp as a pure-play general insurer, and add an estimated $5 billion to its coffers to either return to shareholders or reinvest in its core business.
NAB reportedly approached Suncorp at the highest level, expressing interest in a way designed to let the Suncorp board know that a big bidder would be in play should it decide to formally try to sell the bank, AFR reported.
NAB’s interest comes as investors pressure Suncorp’s board and management team to either find growth in its banking business or get out of it altogether. For years, investor’s have argued that the company’s banking business is sub-scale, primarily operating in one state and detracting from the value of its insurance business.
Suncorp’s bank increased home loans by 7.5% in the six months to March 31 – less than the wider market at 7.8% – and 6.1% for the 12-month period, compared to system growth of 7.8%, according to AFR.
NAB’s six-month housing growth was 10.1%, while its one-year growth was 9%, outstripping its big four rivals.
Suncorp has considered selling its banking business numerous times over the past decade, but has so far opted to retain its “bancassurance” model, AFR reported. Should Suncorp finally move to sell its banking unit, it would be expected to attract the interest of each of the big four banks.
However, NAB is arguably the best-placed to buy given its recent performance under CEO Ross McEwan, according to AFR.
