Speculation grows around possible BOQ, Suncorp banking merger

Media reports are pointing to a possible merger between the banking business of Suncorp and the Bank of Queensland (BOQ).

The Australian Financial Review has reported in its Street Talk section that “a small handful of interested parties” have signed non-disclosure agreements, while the Herald Sun has reported that sources close to the situation say the two banks have examined options on a possible deal.

An unnamed source quoted by the Herald Sun said the merger of the two groups “would pave the way for Suncorp to decouple its banking operations from its general insurance arm through a separate ASX listing”.

The Herald Sun reports that the merger would allow BOQ to improve its funding position, while for Suncorp, a competitive threat in the Queensland market would be annulled.

A union of the two banks would create a banking group with roughly the same level of deposits and loan assets as St George Bank, which was recently acquired by Westpac, according to the Herald Sun.

BOQ chairman Neil Summerson wrote to shareholders earlier this week. Among other matters, he discussed the higher cost of the Government funding guarantee for regional banks, which have a lower credit rating than the majors.

He also pointed to ‘Project Pathways’, the review process currently being undertaken by BOQ managing director David Liddy. Liddy, along with a sub-committee of the bank’s board, is looking at possible initiatives including strategic partnerships and mergers.

Summerson said the bank continues to talk to a “range of parties about various ideas and concepts”.