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Is Suncorp finally willing to bow to the market and part ways with its bank?


Suncorp appears to be on the verge of yielding to market pressure and selling off its banking division in a move touted as a $5 billion deal.

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The Brisbane-based company revealed it was reviewing its banking division and reports claimed that it had got to the stage of bringing in Barrenjoey Capital as advisors.

It told investors this morning that from time to time it reviewed its strategic alternatives in relation to all of its businesses and was currently doing so in respect to its banking operations.

The speculation hasn’t hurt the company’s share price, which jumped 3 per cent this morning.

The sale option has been touted for most of the company’s existence when it merged with Metway in 1996. The company’s structure has never been accepted by the market, which sees it as an insurance company with a bank tagged on.

Earlier this year the NAB was tipped as a likely buyer of the bank and has reportedly told Suncorp of its interest.

The company’s share price is also in the doldrums. Currently trading at $10.84 it is well down on its peak above $20 in 2007.

Suncorp has also been trying to regain market share in home lending.

The company faced flak from Morgan Stanley recently when it warned that Suncorp was exposed to the structural risks stemming from climate change.

It reduced Suncorp’s valuation and suggested the company’s share price would need to fall by 9 per cent before it reached fair value. Its share price target for Suncorp was $10.50.

The company is Australia’s sixth largest bank and fourth biggest general insurer.

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