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BFCSA: 'There's no one to deal with': Why ANZ is yet to sell to IOOF

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'There's no one to deal with': Why ANZ is yet to sell to IOOF

Australian Financial Review Apr 6, 2019 12.00am

James Frost


ANZ is no closer to approving the deal to sell its wealth management business to IOOF after the departure of managing director Chris Kelaher, with the bank expressing concerns the company remains on autopilot after the regulator sidelined five key decisionmakers late last year.

ANZ’s deputy chief executive and former wealth management boss Alexis George told AFR Weekend there were still some roadblocks in the way of the deal, including the fact IOOF did not have a fully functioning executive suite.

“It’s good that we now have a permanent chairman [to deal with] but we just need to understand how we can deal with the capacity issue at the senior level,” Ms George said.

“You have to remember there is no CEO or CFO or a head of legal we can deal with.”

Acting chairman Allan Griffiths was confirmed in the role on Thursday.

IOOF’s billion-dollar bid for ANZ’s pensions and investments business was thrown into chaos in December following an unprecedented move by the Australian Prudential Regulation Authority to ban three executives, its chairman and company secretary from acting as superannuation trustees.

Those named in the action were former managing director Chris Kelaher, former chairman George Venardos, chief financial officer David Coulter, chief legal counsel Gary Riordan and company secretary Paul Vine.

Mr Kelaher and Mr Venardos stepped aside several days after the bombshell announcement before the former MD agreed to resign on Thursday. Mr Venardos remains on leave from the board.

Mr Kelaher will receive a $1.3 million payout in lieu of a notice period. Short-term incentives will be subject to a potential clawback and his long-term performance rights will lapse. Mr Kelaher holds 3.5 million shares in his name worth almost $23 million.

Following the APRA action on December 6, the remaining IOOF employees named by the prudential regulator also ceased managing any aspect of the superannuation business. A three-week hearing for the case has been scheduled for July.

“They have stepped away from anything in relation to superannuation and, as the business we are selling to them is a superannuation business, they can’t be involved,” Ms George said.

Behind the scenes, however, ANZ is pushing ahead with structural changes that will allow for the life business to be transferred to multinational insurer Zurich. Zurich has agreed to pay $2.85 billion for the business.

On Wednesday, the board of OnePath Custodians led by chairman Victoria Weekes quietly voted to approve the legal separation of the pensions and investments business,  which will allow for the sale to Zurich and lay the groundwork for a sale of the wealth business to IOOF or another company.

Recent developments in the market, however, have raised questions about the bank’s options should the IOOF transaction fall over.

Two weeks ago Westpac sold its personal financial arm to boutique agency Viridian for a consideration of less than $50 million. That news came a week after Commonwealth Bank decided to suspend plans to sell its remaining wealth and mortgage businesses under the NewCo umbrella.

NAB has already sniffed the wind and decided to push out the sale of its wealth management business MLC until next year.

ANZ has already accepted $800 million in payment from IOOF, and the dealer groups included as part of the deal have already transferred across to IOOF. ANZ has not set a deadline on the deal, but if it falls over, the bank will be required to repay the money.

The legal separation of the businesses, known as the successor funds transfer or SFT, will involve about 700,000 superannuation fund members and is to begin next Friday.  It is expected to be completed over a few days.

The board of OnePath Custodians, however, will not be required to approve the deal until ANZ chief executive Shayne Elliott and Ms George are comfortable with the transaction.

Ms George said she was in touch with IOOF weekly. She said the bank had made the deal in good faith and needed to give IOOF enough time to get its house in order.

“It’s about making sure there are adequate skills and there is adequate capacity in those roles to deal with our members – it's ANZ’s reputation here too,” she said.


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