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Suncorp's new CEO refutes potential sale of banking unit

Suncorp Group Ltd.'s new CEO, Steve Johnston, refuted speculations that the group may sell its banking unit, The Sydney Morning Herald reported Sept. 9.

Johnston said that the banking unit is core and strategically important to the group, adding that the company will focus on strengthening the unit. Suncorp is also looking to lift returns across its other operations in insurance and wealth, he said.

The banking unit's profits has dragged on groupwide returns, while regulators are increasingly scrutinizing the cross-selling of financial products, prompting some in the market to push for a break up of Suncorp, the publication reported.

The CEO said there were "very practical reasons" to keep insurance and banking under the same ownership, adding that Suncorp's scale means it can make investments in the bank that would not be possible if it was a stand-alone company. The bank also received a stronger credit rating, lowering funding costs, he said.