The speculation is that CBA will make a $10 billion bid to acquire Colonial. This will be the biggest corporate takeover in Australia and is likely to trigger further merger and acquisition activity amongst the big players in the financial services industry.
On this side of the Tasman the deal marks another step in a long process of rationalisation. In recent years ASB has acquired Sovereign, while Colonial has acquired Prudential and some parts of NZI Insurance.
In New Zealand the combined Colonial/ASB business would become the biggest player in the life insurance sector, and its combined funds management business would also be significant.
Currently, according to IPAC figures, Colonial, Sovereign and ASB rank 10th, 11th and 12th respectively in the funds management league table. (Click here to see the latest Fund Manager League table)
However, they all have quite different approaches to funds management. Colonial is into active management, while ASB is a disciple of index funds.
One of the more intriguing outcomes of a merger is which insurance brand would be kept? Sovereign or Colonial? The young new innovator versus the old life office? Or maybe both brands would be kept.
Another outcome that has the market talking is what roles would the respective leaders, Ralph Norris at ASB and David May at Colonial, have in a merged entity.
One area where there is no cross over is banking, however it should be noted that Colonial has spent considerable time recently developing a banking service.
Colonial has been planning to role out a mortgage service, distributed through its franchised advisory network, for sometime.
The launch has been delayed for more than six months due to technological issues. However, it is understood the mortgage product would be very similar to what Sovereign has done highly successful.
Colonial is also planning to expand its banking services. Or should that be Colonial was planning to.
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