IOOF flags ANZ deal delay

Finance sector inquiry impacts on big decisions

WEALTH manager IOOF says its buyout of pension assets from ANZ has been delayed by at least three months, as fallout from a damaging finance sector inquiry hits deal making.

In a stock exchange filing yesterday, IOOF said its deal to buy part of ANZ’s pension unit would now take place after Australia’s third-largest bank had formally split its pension assets, which IOOF expects to be by July 1.

When the companies announced the deal in 2017, they said they expected it to be wrapped up by the end of

March.

Though many merger-andacquisition deals experience delays, the new timeline shows the impact a royal commission inquiry into Australia’s finance sector is having on major decisions of the country’s top lenders, even before the inquiry delivers its final report next month.

IOOF was among the worst-hit companies by the inquiry last year which aired allegations that IOOF used pension customers’ funds when compensating them for losses caused by the wealth manager.

The evidence caused financial watchdog the Australian Prudential Regulation Authority (APRA) to recommend banning IOOF’s top two executives from running the wealth manager, prompting the pair to step down in December and the company’s shares to drop.

APRA has since requested a change in ANZ’s sale contract with IOOF, under which the bank will formally split its pension assets, IOOF said in its statement yesterday.

IOOF’s buyout would only settle once ANZ had made that change, the wealth manager said, without giving a specific date for the settlement.

“It’s hard to say if it (the sale) will go through or not,” said a banking analyst who asked not to be identified because he was not authorised to comment publicly on the matter. “It was always going to be a tough sale, and this probably reinforces that view.”

ANZ, in a separate statement, said the split would allow it to sell other pension assets to Zurich Financial Services Australia regardless of the IOOF delay.

An ANZ spokesman declined to comment about the time frame of the IOOF sale.

Shares of ANZ were up 0.9 per cent at $25.59 at 2.09pm AEDT yesterday, and IOOF were up 2.6 per cent at $5.55 in a higher overall market.