The Suncorp Group Ltd (ASX: SUN) share price is on watch this morning after the company announced its plan to sell its banking business to Australia and New Zealand Banking Group Ltd (ASX: ANZ) for close to $5 billion.
The sale will see the S&P/ASX 200 Index (ASX: XJO) financial services company focusing entirely on its insurance business.
Suncorp has also reconfirmed its previously announced financial year 2023 targets across all its businesses.
As of Friday's close, the Suncorp share price is $11.10.
Let's take a closer look at the major sale announced to the market this morning.
Suncorp share price on watch amid bank sale
The Suncorp share price could be in for a big day after the company announced its banking division is expected to be snapped by ANZ for $4.9 billion. The price tag represents $1.3 billion more than the business' net tangle assets.
Suncorp expects to rake in $4.1 billion in net proceeds from the sale – representing $3.21 per share. The company plans to return most of the funds to shareholders.
ANZ will also pay Suncorp at least $50 million to continue using the Suncorp Bank brand for five years following the sale. Under the deal, ANZ can extend the branding deal for a maximum of two years at a cost of $10 million each year.
Any transaction is still a way off, however. The companies don't expect the sale to be finalised for around 12 months.
The transaction is subject to regulatory approvals from the Federal Treasurer and the Australian Competition and Consumer Commission (ACCC), as well as certain amendments to the State Financial Institutions and Metway Merger Act 1996.
Suncorp CEO Steve Johnston commented on the news that could move the company's share price today, saying:
As a dedicated insurance business we will be singularly focused on meeting the needs of our customers and communities at a time when the value of insurance has never been greater.
By combining with a larger banking group, Suncorp Bank will be well positioned for the future. Customers will see benefits including access to a wider range of products and services, and career opportunities will be enhanced for our people. ANZ is committed to growing its presence in Queensland and I am pleased about the commitments they are making to our customers and employees.
The Suncorp share price is currently around 3.5% lower than it was at the start of the year.
