Suncorp’s Chair, Christine McLoughlin, said the deal was aimed at creating value for shareholders, arguing that a break-up of the financial services conglomerate made more sense for investors.

“Both businesses will benefit from a singular focus on their growth strategies and investment requirements,” McLoughlin said. “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.”

The purchase will require the approval of the Australian Competition and Consumer Commission, which has expressed concerns about competition in retail banking in recent years, and federal Treasurer Jim Chalmers.

In a statement, an ACCC spokeswoman said they will start a review of the acquisition after receiving an application for merger authorisation from ANZ, which isn’t expected for several weeks.

She said the ACCC will consider the role that regional banks play in competing with and challenging the major banks, and the extent to which Suncorp competes on price or through other factors, such as by offering innovative products and services, despite being smaller than the major banks.

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“The ACCC can grant merger authorisation if it is satisfied that either the proposed acquisition would not be likely to have the effect of substantially lessening competition, or the likely public benefit resulting from the proposed acquisition outweighs the likely resulting public detriment,” she said.

In a press conference on Monday, Treasurer Jim Chalmers said he would be guided by the advice from the consumer watchdog when it came to approving the deal.

“I wanted to remind you that there is a process involving the regulators, which concludes with an approval process involving myself. It wouldn’t be appropriate to get into the details of that process as it evolves,” he said.

ANZ on Monday also released a trading update on Monday, saying it had helped to turn around the performance of its home lending business, which posted 3 per cent growth in loans during the quarter. It also benefited from rising interest rates, which helped to lift net interest margins by 3 basis points in the quarter.

“This was a pleasing quarter where all our businesses performed, particularly our home loan business in Australia,” Elliott said.

ANZ also said it was pulling out of discussions with KKR about a possible acquisition of accounting software group MYOB, after ANZ admitted it was considering buying the business only last week. The proposed deal had been met with scepticism by investors and analysts.

ANZ is helping to fund the purchase through a fully underwritten entitlement officer, which will allow retail and institutional shareholders to buy one new share in the bank for every 15 shares held. It is selling the new ANZ stock at $18.90, which is a 12.7 per cent discount to its last trading price.

ANZ said it expected to lift the trading half in its shares on Thursday this week.