Business

By Sameer Manekar

(Reuters) -Australia and New Zealand Banking Group said on Monday it will buy insurer Suncorp Group’s banking unit for A$4.9 billion ($3.33 billion) to bolster its customer growth and home loan book even as it withdrew from talks to buy software firm MYOB Group.

ANZ, one of Australia’s top lenders whose business has been slowed by loan application processing times, will look to reinforce its mortgage books by assuming control of Suncorp Bank’s A$47 billion home loan portfolio.

ANZ loaned A$633.76 billion as of the end of fiscal 2021 – a meagre 1.9% growth from a year ago – while Brisbane-based Suncorp Bank had A$57.56 billion gross loans, of which 80% consisted of home loans. (https://bit.ly/3cazZg8) (https://bit.ly/3u4ZKoa)

“With much of the work to simplify and strengthen the bank completed, and our digital transformation well-progressed, we are now in a position to invest in and reshape our Australian business,” ANZ Chief Executive Officer Shayne Elliott said.

The acquisition is expected to have a net impact on level 1 common equity tier 1 (CET1) of about 28 basis points on a pro-forma basis as at June 2022, ANZ said.

The Melbourne-based bank will raise about A$3.5 billion to fund the deal, which is expected to boost earnings in the low single digits on a run-rate basis for fiscal 2023. ANZ expects to pay a final fiscal 2022 dividend of 72 Australian cents per share, it added.

The deal will give Suncorp net proceeds of A$4.1 billion. It plans to return most of it to shareholders.

“We believe the agreed price fairly values the bank and reflects the hard work of our people and progress made on delivering our strategic objectives,” Suncorp Chairman Christine McLoughlin said.

In a separate statement to the exchange, ANZ said it was withdrawing from discussions with private equity giant KKR & Co to buy software firm MYOB Group, only a week after it confirmed the talks.

($1 = 1.4734 Australian dollars)

(Reporting by Sameer Manekar in Bengaluru; Editing by Daniel Wallis and Richard Chang)

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(Reuters) – Australia and New Zealand Banking Group on Monday said it will buy insurer Suncorp Group’s banking operations for A$4.9 billion ($3.33 billion) to expand its retail and commercial businesses.

ANZ, one of the country’s top lenders, will raise about A$3.5 billion to fund the acquisition, the bank said.

The acquisition of Suncorp Bank will add A$47 billion portfolio of home loans, A$45 billion in deposits and A$11 billion in commercial loans, ANZ said.

“With much of the work to simplify and strengthen the bank completed, and our digital transformation well-progressed, we are now in a position to invest in and reshape our Australian business,” ANZ Chief Executive Officer Shayne Elliott said.

Separately, ANZ withdrew from its discussions with private equity giant KKR & Co to buy software firm MYOB Group.

($1 = 1.4734 Australian dollars)

(Reporting by Sameer Manekar in Bengaluru; Editing by Daniel Wallis)

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(Reuters) – New Zealand’s infrastructure investment company Infratil Ltd said on Monday Vodafone New Zealand would sell its passive mobile tower assets for NZ$1.7 billion ($1.05 billion) to funds managed by two global investment firms.

The sale follows a flurry of divestments by telecom firms as they cut debt and focus on their active mobile assets. Last week, Spark New Zealand announced the sale of a 70% stake in its towers business for NZ$900 million.

Vodafone NZ, of which Infratil owns about 49.95%, will sell 1,484 mobile towers to funds managed by London-based InfraRed Capital Partners and Toronto-based Northleaf Capital Partners.

Each of the buyers will hold 40% of the new towers entity, TowerCo, while Infratil will reinvest proceeds from the sale to acquire a 20% stake.

TowerCo will enter a 20-year deal with Vodafone NZ for access to existing and new towers. TowerCo will build at least 390 additional sites over the next decade, Infratil said in a statement. (https://bit.ly/3RKklbB)

The sale is expected to close in the fourth quarter, subject to approval from Canada’s Overseas Investment Office.

Canada’s Brookfield Asset Management holds a 49.95% stake in Vodafone NZ. (https://bit.ly/3P8VAEp)

($1 = 1.6242 New Zealand dollars)

(Reporting by Sameer Manekar in Bengaluru; Editing by Cynthia Osterman and Richard Chang)

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(Reuters) – Amazon.com Inc is pausing the construction of six new office buildings in Bellevue and Nashville to reevaluate the designs to suit hybrid work, the tech giant said on Friday.

The pausing and delay of construction will not affect Amazon’s hiring plans, a company spokesperson said, reiterating the firm’s proposal to create 25,000 jobs in Bellevue and another 5,000 in Nashville.

“The pandemic has significantly changed the way people work … Our offices are long-term investments and we want to make sure that we design them in a way that meets our employees’ needs in the future,” said John Schoettler, vice president of Global Real Estate and Facilities at Amazon.

Separately, Bloomberg News reported on Friday that Facebook parent Meta Platforms and Amazon have pulled back on their office expansion plans in New York City. (https://bit.ly/3PvFMeD)

Meta has decided not to take an additional 300,000 square feet of space at 770 Broadway, a building near Astor Place where it is already located and Amazon has cut down the amount of space it intended to lease from JPMorgan Chase & Co at Hudson Yards, the report said.

“There are often a number of reasons why we wouldn’t proceed with a particular deal, including office utilization. The past few years have brought new possibilities around the ways we connect and work,” a Meta spokesperson told Reuters without confirming or denying the report.

“We remain firmly committed to New York and look forward to opening the Farley in the coming months,” the spokesperson added.

Amazon declined to comment on the report.

(Reporting by Chavi Mehta in Bengaluru; Editing by Devika Syamnath)

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By Laila Kearney

NEW YORK (Reuters) – Oil gained 2.5% on Friday after a U.S. official told Reuters that an immediate Saudi oil output boost was not expected, and as investors question whether OPEC has the room to significantly ramp up crude production.

The comment during U.S. President Joe Biden’s Middle East visit comes at a time when spare capacity at members of the Organization of the Petroleum Exporting Countries (OPEC) is running low.

“Part of the support is that everybody and their brother who digs down into the Saudi situation see that they don’t have a lot of capacity left,” said John Kilduff, partner at Again Capital LLC in New York.

Brent crude futures settled at $101.16 a barrel, rising $2.06, or 2.1%, while West Texas Intermediate crude settled at $97.59 a barrel, gaining $1.81, or 1.9%.

Both benchmarks saw their biggest weekly percentage drops in about a month, largely on fears earlier in the week that a nearing recession would chop away at demand. Brent lost 5.5% in its third weekly drop, while WTI was down 6.9% in its second weekly decline.

Biden, prompted by energy and security interests, arrived in Jeddah on Friday and had been expected to call for Saudi Arabia to pump more oil.

But the United States does not expect Saudi Arabia to immediately boost oil production and is eyeing the outcome of the next OPEC+ meeting on Aug. 3, a U.S. official told Reuters.

“If the market was expecting an announcement between President Biden and (Saudi Crown Prince) Mohammed Bin Salman that oil production was going to be increased, they were sorely disappointed,” said Andrew Lipow of Lipow Oil Associates in Houston.

“But I do think that in the upcoming weeks, especially at an upcoming OPEC meeting, we might see production increases out of both Saudi Arabia and the United Arab Emirates.”

The United States could still secure a commitment that OPEC will boost production in the months ahead in hopes that it will provide a signal to the market that supplies are coming if necessary.

Meanwhile, the U.S. oil rig count, an early indicator of future output, inched up by two to 599 this week to their highest since March 2020, energy services firm Baker Hughes Co said.

Also signalling more oil supply on the horizon was Libya’s oil chief, who said crude output will resume after meeting groups that have blockaded the country’s oil facilities for months.

Lifting force majeure on production could mean a return of 850,000 barrels per day.

On the economic front, the U.S. Federal Reserve’s most hawkish policymakers on Thursday said they favoured a rate increase of 75 basis points at its policy meeting this month, not the bigger increase traders had priced in after a report on Wednesday showed inflation was accelerating.

Concerns that the Fed might opt for a full 100 bps rate rise this month and weak economic data had led to Brent and WTI shedding more than $5 on Thursday to below the closing price on Feb. 23, the day before Russia invaded Ukraine, though both contracts clawed back nearly all the losses by the end of the session.

Analysts, however, expect continued pressure on oil from concerns over the global economy.

“Brent has dipped noticeably below $100 per barrel this week. It is likely to continue sliding given that the recession fears will presumably not abate for the time being,” Commerzbank said in a note.

Bearish market sentiment has also followed renewed COVID-19 outbreaks in China, which have hampered a demand recovery.

China’s refinery throughput in June shrank nearly 10% from a year earlier, with output for the first half of the year down 6% in the first annual decline for the period since at least 2011, data showed on Friday.

(This story refiles to remove repeated line of text)

(Additional reporting by Rowena Edwards in London, Jeslyn Lerh in Singapore; Editing by Marguerita Choy, Susan Fenton and Chizu Nomiyama)

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(Reuters) – Elon Musk filed a motion on Friday opposing Twitter Inc’s request to fast-track a trial over his plan to terminate his $44 billion deal for the social media firm.

Musk’s lawyers, in papers filed with the Delaware Chancery Court, said Twitter’s “unjustifiable request to rush this $44 billion merger case to trial in just two months” should be rejected.

“Twitter’s sudden request for warp speed after two months of foot-dragging and obfuscation is its latest tactic to shroud the truth about spam accounts long enough to railroad defendants into closing,” the filing said.

The lawyers argued that the core dispute over false and spam accounts is fundamental to Twitter’s value, is extremely fact- and expert-intensive, and will require substantial time for discovery.

The lawyers have requested a trial date on or after Feb. 13 next year.

Twitter declined to comment.

Shares of Twitter were down about 1% in extended trading.

(Reporting by Ananya Mariam Rajesh in Bengaluru and Sheila Dang in Dallas; Editing by Sriraj Kalluvila and Rosalba O’Brien)

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By Rowena Edwards

LONDON (Reuters) -Oil prices rose on Friday after a U.S. official told Reuters an immediate Saudi oil output boost is not expected, with further support from indications that the U.S. central bank could raise interest rates less aggressively than anticipated.

Brent crude futures for September delivery rose 76 cents, or 0.77%, to $99.86 a barrel by 0929 GMT while WTI crude rose 28 cents, or 0.29%, to $96.06.

The U.S. Federal Resreve’s most hawkish policymakers on Thursday said they favoured a rate increase of 75 basis points at its policy meeting this month, not the bigger increase traders had priced in after a report on Wednesday showed inflation was accelerating.

The interest rate uncertainty and weak economic data led to Brent and WTI shedding more than $5 on Thursday to less than the closing price on Feb. 23, the day before Russia invaded Ukraine, though both contracts clawed back nearly all the losses by the end of the session.

The U.S. official’s comment on Saudi oil production comes at a time when capacity at members of the Organization of the Petroleum Exporting Countries (OPEC) is running low, with most producers pumping at maximum capacity.

U.S. President Joe Biden, meanwhile, is visiting Saudi Arabia to attend a summit of Gulf allies and is expected to call for the region to pump more oil.

“[Biden’s] case will have been weakened significantly by the latest price rout,” said Stephen Brennock of oil broker PVM.

Analysts, meanwhile, expect to continued pressure on oil from concerns over the global economy.

“Brent has dipped noticeably below $100 per barrel this week. It is likely to continue sliding given that the recession fears will presumably not abate for the time being,” Commerzbank said in a note.

Bearish market sentiment has also followed renewed COVID-19 outbreaks in China, which have hampered a demand recovery.

China’s refinery throughput in June shrank nearly 10% from a year earlier, with output for the first half of the year down 6% in the first annual decline for the period since at least 2011, data showed on Friday.

(Additional reporting by Jeslyn Lerh in Singapore and Laura Sanicola in New YorkEditing by David Goodman)

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(Reuters) – Global equity funds faced a third straight week of outflows in the week to July 12 on concerns over the prospect of further central bank interest rate hikes and the health of economies worldwide.

According to Refinitiv Lipper, investors disposed of $4.33 billion worth of global equity funds in a third straight week of net selling.

GRAPHIC: Fund flows: Global equities bonds and money market- https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnelljpq/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg

Data released this week showed U.S. consumer prices accelerated faster than economists had forecast, as the CPI jumped 9.1% in the 12 months to June, bolstering the case for more supersized Fed rate hikes.

European and U.S. equity funds saw outflows worth $4.04 billion and $1.41 billion respectively, but Asian funds obtained $0.6 billion in inflows.

Data for sector funds showed consumer discretionary, metals and mining, and industrials suffered outflows of $846 million, $494 million and $419 million respectively, but utilities drew $519 million in a second straight week of inflow.

GRAPHIC: Fund flows: Global equity sector funds- https://fingfx.thomsonreuters.com/gfx/mkt/egpbkxooqvq/Fund%20flows-%20Global%20equity%20sector%20funds.jpg

Meanwhile, safer money market funds accumulated inflows for a second consecutive week, drawing $5.15 billion.

Global bond funds recorded weekly net selling worth $3.1 billion, after receiving a marginal inflow of $385 million in the previous week.

Global government bond funds remained in demand for a 10th successive week, with net purchases of $1.47 billion, but short- and medium-term, and high yield funds faced withdrawals worth $3.05 billion and $1.83 billion respectively.

GRAPHIC: Global bond fund flows in the week ended July 13- https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrbzzypm/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20July%2013.jpg

Among commodity funds, investors offloaded precious metal funds worth $2.18 billion, marking a second straight week of net selling, while energy funds gained marginal inflows, worth $31 million, after six weeks of outflows in a row.

An analysis of 24,310 emerging market funds showed equity funds drew $531 million, as net buying continued for a fourth week, but bond funds had outflows of $1.9 billion.

GRAPHIC: Fund flows: EM equities and bonds- https://fingfx.thomsonreuters.com/gfx/mkt/klpykynnjpg/Fund%20flows-%20EM%20equities%20and%20bonds.jpg

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Emelia Sithole-Matarise)

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(Reuters) – UnitedHealth Group Inc posted an 18.8% rise in quarterly profit on Friday, helped by strong sales at its Optum healthcare services unit.

The company operates one of the largest U.S. health insurance businesses that offers government and employer-backed health plans, as well as the Optum unit which manages drug benefits and provides medical services.

(Reporting by Amruta Khandekar and Manas Mishra in Bengaluru; Editing by Vinay Dwivedi)

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By Stephen Culp

NEW YORK (Reuters) – The S&P 500 pared early losses to close modestly lower on Thursday after investors digested disappointing quarterly results from two large U.S. banks and hotter-than-expected inflation data.

Initially, all three major U.S. stock indexes sold off sharply in the wake of second-quarter earnings from JPMorgan Chase & Co and Morgan Stanley. Both reported slumping profits and warned of impending economic slowdown.

Losses narrowed as the session wore on.

“There was an irrational response to the JPMorgan and Morgan Stanley results,” said Jay Hatfield, chief executive and portfolio manager at InfraCap in New York. “It wasn’t a surprise that investment banking was weak.”

“JPMorgan warned that there’s uncertainty in the market, but if you’re alive and breathing you know there’s uncertainty in the market.”

JPMorgan CEO Jamie Dimon struck a cautious note on the global economy while Morgan Stanley’s investment banking unit struggled to cope with a slump in global dealmaking.

Shares of JPMorgan Chase and Morgan Stanley both fell, as did the broader the S&P Banks index.

Slowdown worries were exacerbated as the Labor Department’s Producer Price Index report echoed Wednesday’s Consumer Price Index data, showing hotter-than-expected inflation in June.

The sell-off began to ease after Fed Governor Christopher Waller said he supported another 75 basis point interest rate increase in July, easing jitters over an even bigger, 100 basis point hike.

“The Fed is going to rise rates by 75 but they shouldn’t,” Hatfield said. “The Fed has already done a lot to reduce inflation but they’re not going to realize that until they see it in the rear view mirror.”

“The thing to remember about the Fed is it’s almost as if their third mandate is to be behind the curve,” Hatfield added.

On Wednesday, the odds of a larger hike grew after the CPI report, considering the central bank’s intention to aggressively tackle decades-high inflation – a prospect which increases chances of an economic contraction.

“There will be a recession but a mild one,” Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “The key component is continued strength in the labor market. Given where we are in the employment picture, that’s not an immediate threat.”

Core inflation, which strips out food and energy prices, continues to ease from the March peak, although it remains well above the central bank’s average annual 2% target:

(Graphic: Inflation: https://graphics.reuters.com/USA-STOCKS/lbpgnebeyvq/inflation.png)

According to preliminary data, the S&P 500 lost 11.63 points, or 0.31%, to end at 3,790.15 points, while the Nasdaq Composite gained 0.99 points, or 0.01%, to 11,248.57. The Dow Jones Industrial Average fell 144.07 points, or 0.47%, to 30,628.72.

Second-quarter earnings season is officially underway, with JPMorgan and Morgan Stanley starting it off on a dour note.

Analysts now expect aggregate S&P 500 second-quarter earnings growth of 5.1%, significantly less than the 6.8% annual growth estimate at the beginning of the quarter, according to Refinitiv.

U.S.-listed shares of Taiwan Semiconductor Manufacturing rose following the chipmaker’s upbeat revenue guidance.

Conagra Brands shares tumbled after it issued an annual earnings forecast below estimates.

(Reporting by Stephen Culp; Additional reporting by Amruta Khandekar in Bengaluru; Editing by Richard Chang)

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