SUNCORP SELLS $1.6 BILLION BAD ASSET

Written on the 18 June 2013

SUNCORP SELLS $1.6 BILLION BAD ASSET

SUNCORP (ASX:SUN) has sold its non-core banking portfolio for $1.6 billion at a weighted realisation of 60 cents in the dollar to the Goldman Sachs Group, the bank announced today.

The so-called “bad” corporate and property assets were separated from Suncorp’s core banking business in the wake of the global financial crisis.

They were initially worth $18 billion, but had reduced to $2.8 billion by May 31 through an orderly runoff strategy.

Chairman Ziggy Switkowski says the resolution of the non-core portfolio marked a significant milestone in the group’s transformation.

He also flagged a special dividend for the second half above the payout range of 60-80 per cent and says any surplus capital will go to shareholders.

“Resolving the non-core portfolio over the past four years has been a difficult and challenging experience for the board, Suncorp management and, of course, our shareholders,” says Switkowski.

“The reducing scale of the non-core portfolio and the strength of the Suncorp Group have allowed us to act decisively at this time to remove the non-core portfolio risk.”

The group expects a further organic run-off of non-core assets and individual loan sales of $500 million in June and $200 million in July. It has a residual portfolio of 130 loans worth $500 million, which will be managed as part of the overall bank’s lending portfolio.

The majority are expected to be settled over the 2014 financial year.

The non-core portfolio is also expected to incur an after-tax loss of between $470 and $490 million in the second half of the financial year.

CEO Patrick Snowball says it was the right time to sell, with the portfolio below $3 billion.

“This is a significant turning point and the non-core portfolio will no longer divert attention from the real progress being made across our business.”

The bank’s core operations in the low risk segments of retail, agribusiness and commercial SME continue to perform strongly.

Suncorp shares were down 1.81 per cent to $11.645 in early trading this morning.


Latest News

APOLLO REVS UP ITS RESULTS

APOLLO Tourism & Leisure (ASX: ATL) has hit its profit forecast in its maiden result as a publicly traded company...

JASMINE YARBROUGH AND TAMIE INGHAM TAKE MARA & MINE TO HOLLYWOOD

MARA & MINE entrepreneurs Jasmine Yarbrough and Tamie Ingham (pictured left and right respectively) slipped in...

HUGE PROFIT SPIKE FOR HELLOWORLD HEALS MERGER WOUNDS

HELLOWORLD (ASX: HLO) gripped the share market this morning after its announcement of a whopping 880 per cent increas...

PROFIT DROP AT SERVCORP

SERVICED office company Servcorp has seen its profit fall, citing New York City, Singapore and Saudi Arabia as the pr...

Related News

WHY EMPLOYEE-OWNED COMPANIES ARE BEATING ASX200 SHARE PRICES

EMPLOYEE-owned companies command a higher share price than their publicly listed peers, reaping a 17 per cent prem...

RISE OF THE MACHINES HAS WORKERS SWEATING

UP TO 3.8 million Australian workers are fearful their job may soon be terminated by a robot, a new survey has shown....

LESS TALK, MORE SMALL BUSINESS ACTION IN 2017

THE future growth and prosperity of Australian SMEs could be undermined if governments lose sight of the sector...

TEST DRIVE A POST GRAD AT BOND

THERE'S only one way to really move your career into the fast lane, says Bond University, and 'test driving...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter