The four banks of Australia have already gone through measures to counter its recent problems with its financial advice services.
Australian and New Zealand Banking Group [ASX: ANZ] have decided to take an extra step by flagging a buyback of shares over an ongoing program.
Today their shares have grown by 1.05%. The month of May has seen a positive increase for the bank.
Insurance pay check ensures potential buyback
ANZ stated that the bank finalised a reinsurance arrangement with Zurich, which ANZ sold part of its insurance branch to in the past.
Now the large bank plans to enter new territories to help innovate their business with a reliable platform.
ANZ and Insurance group Zurich will both enter a 20-year distribution agreement, where Zurich products will be offered through ANZ’s channels.
The company stated that ANZ will still continue to work through capital management options while including an additional buyback of over $1 billion.
The deal with Zurich is only the first tranche of a $2.85 billion transaction.
Upon finalising the deal, Zurich will be in complete ownership of One Life Australia Holdings, however ANZ will continue to retain its New Zealand business.
In order to begin returning surplus capital, ANZ would begin buying back up to $1.5 billion worth of shares in the market.
Afterwards, they would soon consider the option of additional share buybacks which goes above its ongoing program.
The share buyback will increase its equity capital.
Glen Dyer from Share Cafe wrote,
‘ANZ also confirmed that it will be use the current buyback while buying shares in the market to neutralise the dividend reinvestment program for the interim dividend. ANZ said it would appoint a third party to buy the shares from May 18 to May 31.’
The sale of OnePath Life was actually announced back in December last year, as it consists of two transactions totalling to almost $3 billion overall.
The acquisition will help improve the overall quality of ANZ’s insurance plan, ensuring its customers that they are in the right hands.
For Money Morning
PS: If you manage your own money or simply want to learn the most effective strategies to both grow and protect your wealth, this free report ‘The Three Best Investments in Australia for 2018 and Beyond’ is for you. Click here for details.