Could HSBC be about to acquire Suncorp Group Ltd’s (ASX: SUN) banking division?
Suncorp Group is a $17 billion insurance and banking company. It has its own brand of products but also operates under names like AAMI, GIO, Apia and Shannons. It also operates a regional banking division called Suncorp Bank.
Is Suncorp Bank About To Be Acquired By HSBC?
Suncorp Bank is a large profit generator for the Queensland business outside of its insurance business.
But, Bell Potter thinks there could be a chance for HSBC Holdings plc’s (LON: HSBA) Australian subsidiary to acquire Suncorp Bank even though the broker has previously touted the idea of it merging with Bendigo and Adelaide Bank Ltd
(ASX: BEN).
HSBC Australia could be a good suitor because of its large acquisition capability and its desire to expand in Australia’s residential mortgage market and for higher visibility.
Suncorp Bank has a branch network that would be attractive to HSBC, although it may look to close as much as half of the branches because of the high usage of brokers.
Bell Potter said a combined business of Suncorp Bank and HSBC Australia would turn them into a “worthwhile” challenger bank with improved financial capability to offer better interest rates to customers whilst achieving cheaper funding costs.
Suncorp Bank is currently finding it hard to achieve meaningful growth, with the overall bank system’s credit growth remaining slow and Australian house prices falling, particularly in Sydney and Melbourne.
HSBC generates most of its earnings from Europe and Asia, so growth via acquisition in another western country like Australia could be quite welcome for the banking giant.
But I would certainly rather be Suncorp Bank rather than HSBC in the transaction because the risks of the Australia banking sector are quite elevated at the moment, but HSBC would be buying Suncorp Bank with a (for now?) high level of profit.
Even better, I think one of the proven ASX shares in the free report below could be better than both HSBC and Suncorp over the long term.
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