The Australian Prudential Regulation Authority has approved the sale of ANZ’s OnePath Pensions and Investments business to IOOF Holdings, bringing to a conclusion a transaction that has been in train for two years.
In announcing its decision, APRA says IOOF has made improvements to its governance and business operations, although there is more to be done.
The protracted sale process has been costly for ANZ. When the sale was first announced in October 2017, the price was A$975 million. But a couple of months ago the bank announced that it had dropped to $850 million.
ANZ says: “The revised terms reflect changing market conditions and include lower overall warranty caps, as well as some changes to the strategic alliance arrangements.”
The bank expects the sale to be completed in the March quarter next year. It estimates that it will increase its APRA CET1 capital ratio by about 20 basis points.
APRA says in a statement that its decision “recognises IOOF’s progress in strengthening governance structures and management of conflicts within its existing RSE licensees, in response to additional licence conditions imposed by APRA in December 2018.”
APRA notes that IOOF has appointed a majority of independent directors to its RSE licensee boards and it has moved to legally separate its dual regulated entities.
IOOF has also implemented a dedicated business function to support its APRA regulated entities.
“These structural changes provide IOOF’s RSE licensees, now including OnePath and Oasis, with the necessary framework to operate independently with the IOOF Group.”
In June, ANZ completed the sale of the other part of the OnePath business, OnePath Life, to Zurich Financial Services Australia.
That deal was worth $2.85 billion. Terms of the sale include a 20-year agreement for Zurich to provide life insurance products to ANZ customers through the bank’s distribution channels.