Australia & New Zealand Banking Group Ltd has agreed to reduce the sale price of its OnePath pensions and wealth business to IOOF Ltd as the nation’s largest banks exit an industry that’s been plagued by misconduct.
IOOF will pay A$825mn ($558mn) for the unit, down from the initial A$975mn price, the Melbourne-based wealth manager said in a statement yesterday.
The final price could still change pending a review of the unit’s net assets and is subject to regulatory approval.
“The revised terms reflect both ANZ and IOOF’s commitment to completing the transaction,” IOOF chief executive officer Renato Motasaid. “Despite a challenging operating environment for wealth management, the strategic rationale for the transaction remains compelling and we continue to be confident in the significant benefits it will deliver.”
IOOF shares surged 8.5% in early Sydney trading.
Originally agreed in October 2017, ANZ Bank’s OnePath sale has been stalled after Australia’s banking and wealth industry was lashed for years of wrongdoing in a public inquiry into misconduct in the financial services industry.
The revised sale terms come after Australia’s prudential regulator last month lost its case against IOOF that claimed the wealth manager’s executives failed to act in the best interests of pension-fund customers.
The Federal Court ruled the company had not breached the law and dismissed Australian Prudential Regulation Authority’s attempts to disqualify executives. Securing OnePath is a fillip for new Chief Executive Officer Renato Motaas he ends a tormenting period for the firm after the misconduct inquiry heard IOOF breached its fiduciary duties and board minutes were handwritten on scraps of paper.
The sale is also a boost for ANZ Bank too, as the other major lenders struggle to exit the wealth industry. Commonwealth Bank of Australia shelved plans to spin off its wealth unit and National Australia Bank Ltd’s exit from it’s MLC wealth management business has been delayed.
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