ANALYSIS
THE appointment of an experienced international insurance executive sends a loud message from the Suncorp board that the company's future lays in underwriting.
Banking, which almost brought Suncorp to its knees late last year, is clearly on the outer.
Any sale of the bank would still have to get around lukewarm demand and possibly tough regulatory scrutiny but will bring to an end one of the more ambitious experiments in Australian financial services history: welding a bank and insurer and wealth management into a one-stop shop.
The Patrick Snowball appointment, while welcomed by investors for infusing new talent into the local market, is unlikely to ease the immediate issues facing Suncorp.
Some investors were taken by surprise by the chairman, John Story, who said yesterday that he intended to remain in the role to see Suncorp through the "good times" too. These could be years off and contrasts with expectations that Story was poised to stand down within six months.
Meanwhile the acting chief executive officer, Chris Skilton, who has already flagged his retirement from the group, is poised to push through one more round of restructuring before Snowball takes charge, possibly extending to the sale of Suncorp's real estate services arm, LJ Hooker, given the preliminary work already undertaken.
Elsewhere a new chief financial officer still needs to be found, although this is likely to go to an internal candidate rather than an outsider.
The banking arm, which has already split its lending book into so-called good loans and non-core loans (mostly big-ticket property developments that have been placed into run-off) is under pressure to raise an additional $600 million in capital, according to calculations by an HTM Wilson analyst, Brett Le Mesurier. Wealth management returns are sagging and competition remains tough in commercial insurance markets. Investors can also expect more pain as Snowball writes down asset values and takes further restructuring charges.
Snowball says he draws on his military experience. Here senior executives can expect an autocratic management, a contrast to the former boss John Mulcahy's conciliatory approach.
Snowball's style is based on "relentless focus on delivery".
"It's neither complicated or particularly novel. It relies on absolute clarity of purpose and direction.
"This requires one to be very clear on the outset of what the goals and objectives are," he says.
