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Failed wealth sale could see major bank refund $800m

Failed wealth sale could see major bank refund $800m

James Mitchell
— 1 minute read

Morningstar has explained the possible consequences for two financial services giants if a significant wealth acquisition fails. 

The future of listed wealth giant IOOF looks increasingly uncertain after APRA took measures to disqualify several key employees, including the chairman and CEO, from acting as a responsible officer or trustee of the group’s superannuation entity, IMIL. 

IOOF is currently in the process of acquiring ANZ’s wealth business, a transaction that had been a key driver in Morningstar’s forecasted growth for IOOF. The acquisition now looks unlikely. 


“Following APRA’s actions, ANZ now indicates it is assessing its options regarding the deal, which is complicated by the fact that IOOF has already paid $800 million and took legal ownership of ANZ’s aligned dealer group on 1 October,” Morningstar analyst Chanaka Gunasekera said. 

“We understand from the company that if the trustee of the ANZ superannuation funds being transferred conclude the successor fund transfer is not in the best interest of members, IOOF is still likely to retain the aligned dealer group and their financial adviser,” he said.

“Nonetheless, the primary driver of our near-term earnings growth forecast is the successor fund transfer. However, we would also expect that if the fund transfer did not occur, then IOOF would receive a refund from ANZ Bank of a portion of the $800 million already paid.”

Morningstar has sought further clarification on these points from IOOF and ANZ, which it expects to receive by early next week. In the meantime, the analyst has placed the IOOF stock under review. 

Morningstar has previously flagged the possibility that regulators, which are taking a tougher stance against financial services firms since the royal commission began, could force IOOF to dismantle its vertically integrated business model. 

“Following the royal commission, ASIC is likely to more proactively regulate vertically integrated wealth managers, especially given IOOF’s increased size after the ANZ wealth acquisition,” Mr Gunasekera said. 

“A required separation of its advice business from its other businesses would be even more damaging,” he argued. “If required, this would not only negatively affect its advice business but also likely lead to lower fund flows into its platform, investment management and trustee businesses.”



Failed wealth sale could see major bank refund $800m
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