News: NAB UPDATE 1-ANZ shakes up wealth business to boost profits

(Rewrites throughout with details about the changes, adds shares)

Australia and New Zealand Banking Group (ANZ) on Wednesday said it would break up its global wealth division to focus on improving returns and capital efficiency in insurance and superannuation.

Under the changes, Joyce Phillips, who led the division since its formation in 2012, would leave while the bank would form a new division known as Australia Wealth focussed on insurance, superannuation and investment, it said.

The changes are another sign of increasing pressure on Australia's major banks, which are scrambling to improve shareholder returns and profits amid slowing revenue growth and stricter regulatory capital rules.

Investors welcomed the news with shares in the bank jumping more than 3.5 percent in a strong Australian market, their biggest single-day rise since September 2015.

"The simplified approach provides the opportunity to focus on improving returns and capital efficiency from our insurance, superannuation and investments product business given higher regulatory capital requirements," CEO Shayne Elliott said in a statement.

People familiar with ANZ's thinking said Australia's No.4 lender would eventually look at a bancassurance tie-up or a partial sale of its insurance arm to release capital.

Late last year, larger rival National Australia Bank (NAB) sold an 80 percent stake in its life insurance arm to Japan's Nipon Life Insurance Co [NPNLI.UL] for about $1.7 billion, sparking speculation that ANZ could follow suit.

Australian banks are sitting on about $6 billion of insurance business on their books, based on their embedded values, bankers and analysts estimate.

New rules requiring banks to set aside capital for their insurance businesses wholly in equity compared with a mix of assets they could use previously are the main driver for banks to reassess such non-core businesses.

Banks worldwide are expected to preserve more capital as global and national regulators determine how much more money they would need to survive a repeat of the global financial crisis.

Australia's "Big Four" banks including ANZ, NAB, Westpac (WBC) and Commonwealth Bank (CBA) have together raised over A$20 billion since May 2015 as regulators try to make them among the safest in the world.

($1 = 1.3933 Australian dollars)