News: SUN UPDATE 1-Australia's Suncorp Group conducts review of banking arm

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June 27 (Reuters) - Australia's Suncorp Group (SUN) said on Monday it was conducting a strategic review of its banking operations, which could lead to a potential sale or spin-off of the unit, allowing it to focus on its top-revenue generating insurance business.

The country's second-largest insurer by market value, without divulging much information, said it "reviews its strategic alternatives in relation to all of its businesses from time to time and is currently doing so in respect of its banking operations."

The news follows a report https://www.afr.com/street-talk/suncorp-kicks-off-bank-review-mulls-5b-sale-demerger-20220626-p5awnq from the Australian Financial Review (AFR), citing sources involved in talks, which said the insurer was vying a possible spin-off or sale of its banking arm to focus on its more valuable insurance business, which contributed to 71% of the total revenue in fiscal 2021.

Suncorp's banking and wealth unit posted a profit after tax of A$419 million ($291.12 million) in fiscal 2021 https://www.suncorpgroup.com.au/uploads/FY21-Annual-Report.pdf, contributing to 40% of the total profit, and had loans worth A$58.39 billion as at Dec. 31, 2021, mostly comprising home loans.

A demerger could have Suncorp hand investors shares in a new ASX-listed bank, probably worth about A$5 billion ($3.48 billion), based on trading in the country's big four and regional banks, according to the AFR report.

The sale comes amid a wave of demergers among the country's top-tier companies, as boards streamline business models to create value for shareholders.

($1 = 1.4380 Australian dollars)