(Adds details of deal, share performance, background) Oct 17...

(Adds details of deal, share performance, background)

Oct 17 (Reuters) - Australia's IOOF Holdings (IFL) said on Thursday it would now pay 13% less than earlier flagged for Australia and New Zealand Banking Group's (ANZ) pension assets to reflect changing market conditions, sending the wealth manager's shares up 9.4%.

The announcement comes amid heightened scrutiny of the country's financial sector after an investigation last year revealed wide-spread wrongdoing in the industry.

IOOF said it would now pay A$825 million ($557.12 million) for OnePath as it renegotiated terms of the deal with pension unit's parent ANZ. The companies had announced the deal in 2017 before the Royal Commission inquiry kicked off.

IOOF's shares jumped 9.4% to A$6.96 after the announcement, marking the stock's highest since December last year.

"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," ANZ said in a separate statement.

The companies also delayed the closing date of the deal to the end of December, adding that it was subject to Australian Prudential Regulation Authority approval.

($1 = 1.4808 Australian dollars)