In morning trade the Australia and New Zealand Banking Group (ASX: ANZ) share price has edged higher despite the release of an update on its wealth business sale.
At the time of writing the bank's shares are up over 1% to $25.98.
What was in the update?
The banking giant released the update in response to news that the Australian Prudential Regulation Authority (APRA) has taken regulatory action against IOOF Holdings Limited (ASX: IFL).
According to the release, APRA has advised that it is seeking Federal Court approval to disqualify three executives and two directors from the industry, including its chairman and managing director, for failing to act in the best interests of superannuation members.
In addition to this, APRA is aiming to have additional licence restrictions placed on IOOF.
What does this mean for ANZ Bank?
In October 2017 the bank agreed to sell its OnePath Pensions and Investments business to IOOF for a cash consideration of $975 million. This latest news has caused a few doubts about the transaction.
ANZ Bank's deputy CEO Alexis George said: "Given the significance of APRA's action, we will assess the various options available to us while we seek urgent information from both IOOF and APRA."
Before adding that: "The work to separate Pensions and Investments from our Life Insurance business continues. There is a framework available to complete the Zurich transaction that does not involve IOOF."
What now?
While this is a slight blow for ANZ Bank, I don't think it changes things too much. I still think the bank would be a great option for investors that don't already have exposure to the sector along with Westpac Banking Corp (ASX: WBC).
IOOF Holdings, on the other hand, is not a company I would be in a hurry to invest even after its significant share price decline today.
I would suggest investors wait to see how the situation unfolds before considering an investment.
