Suncorp says approached for bank, wealth units

By Sonali Paul

MELBOURNE (Reuters) - Australian insurance and banking group Suncorp-Metway Ltd (SUN.AX) said it received several approaches for its banking and wealth management operations, which analysts reckon could fetch up to A$5 billion ($3.9 billion), sending its shares up 8.5 percent on Monday.

Moves on Australia's second-biggest car and home insurer and sixth-biggest bank reflect the impact of the global credit crunch, which has stretched Suncorp's wholesale funding costs as with Australia's top bank takeover target, St George Bank Ltd SGB.AX, and mooted target BankWest, owned by Britain's HBOS HBOS.L.

"Clearly the flow-on from the credit crunch is encouraging consolidation," said Karara Capital investment manager Rohan Walsh, adding conditions were making it tough for 'A'-rated banks, such as Suncorp, to finance themselves.

Analysts have speculated in recent weeks that third-ranked Commonwealth Bank of Australia (CBA.AX) is a front-runner to bid for Suncorp's bank as it has the strongest capital position.

Deutsche Bank estimated CBA could pay around A$4 billion for Suncorp's bank with no impact on earnings per share in the first year and boosting earnings by 3 percent by year three.

CBA shares are more highly rated than rivals National Australia Bank Ltd (NAB.AX) and Australia and New Zealand Bank Group Ltd (ANZ.AX). Their other main rival, Westpac Banking Corp (WBC.AX), is busy with its proposed takeover of St George.

"CBA would still be my favourite. I'm not sure NAB's in acquisition mode. I think they would want to preserve capital. CBA are just in the best position," said David Spry, research manager at broker FW Holst.

ANZ might have a look, but it is more interested in expanding in Asia and might also have difficulty paying for Suncorp's banking and wealth management arm.

"That's the issue -- whether they can afford it, if they want it," Spry said of ANZ.

Suncorp confirmed it had been approached after its shares rose 11 percent on Thursday and Friday on speculation some of Australia's top banks were interested in the group's bank.

"Shareholders are advised that these preliminary approaches may or may not lead to formal proposals being made to Suncorp," the company said in a statement on Monday.

It has appointed Lazard Carnegie Wylie and UBS to advise on the matter.

Suncorp shares rose to a high of A$11.65 and last traded up 4.2 percent at A$11.13

Suncorp is seen as vulnerable to a takeover after its profit for the year to June 2008 slumped nearly 50 percent due to higher insurance claims than normal, after a series of weather events, and the global credit crunch.

CBA is also reported to have been rebuffed in approaches to HBOS Australia for its BankWest operation.