The deal was struck at $4.9 billion but after costs Suncorp will receive a net $4.1 billion, representing $3.21 a share, from its overall value at $11.10, based on Friday’s closing price.

“Consistent with the approach taken in previous divestments, the current intention is to return the majority of the proceeds to shareholders,” Suncorp said.

“Excess capital is likely to be returned through a combination of a pro-rata capital return, a fully franked special dividend and potentially a share buy back.”

While the bank has been a below par performer, ANZ said it expected the deal would increase loans in its retail and commercial by 17 per cent to $403 billion. Its housing mortgages would rise by 17 per cent to $326 billion and business lending by 20 per cent to $67 billion. Deposits would rise by 22 per cent to $179 billion.

There would be no net job losses from the deal or branch closures for the first three years following the finalisation of the deal.

ANZ would fund the deal through a $3.5 billion equity raising through a renounceable rights offer.

The price received represented 1.3 times the net tangible assets of the banking business.

To sweeten the deal ANZ said it would also make available $10 billion of lending to support Queensland businesses over the next three years.

A further $15 billion of new lending would be allocated as part of ANZ’s existing renewables lending commitment to support the local industry and provide for green infrastructure for the Olympics.

ANZ said the Suncorp brand would remain following the deal, which would include a five-year licensing agreement worth a minimum $50 million for the use of Suncorp branding.

The successful Suncorp insurance business is not part of the deal and would continue to run independently, but it was its banking business that had been holding back the company.

It had never been accepted by the market and many similar operations that had tried to merge banking and insurance around the world had since walked away from the strategy.

The deal also has to be signed off by the Australian Competition and Consumer Commission which has been wary of similar deals in the past.

Also, the legislation which established Suncorp when it merged with Metway and the Queensland Industry Development Corporation in 1996 included that it would retain a head office in Queensland. ANZ said it would maintain a strong state presence with a head office operating out of the new Heritage Lane site.

Suncorp said the Metway merger legislation would have to be amended. The State Government has yet to comment on the deal.

Treasurer Cameron Dick said Suncorp Bank was a product of Queensland.

“It wouldn’t exist without Queensland. We will be driving a hard bargain to ensure the new entity’s Queensland presence is preserved,” he said.

“Queenslanders deserve nothing less.”

Managing director Steve Johnston said it was a significant deal in the history of Suncorp and would result in a simpler business.

“In considering the merits of the transaction it was important to us that any potential acquirer would demonstrate a commitment to Queensland and have long term plans to grow in what you would expect me to call the most important state in the Commonwealth,” he said.

He said customers would benefit from the many products ANZ offered while staff would now have the career opportunities available as a part of the Big Four banks.

He said the decision to sell the bank had not been taken lightly.

“By combining with a larger banking group, Suncorp Bank will be well positioned for the future,” Johnston said.

“Suncorp’s head office will remain in Queensland and we will continue to be located at our purpose built centre at Heritage Lane.”

“Customers will see benefits including access to a wider range of products and services and career opportunities will be enhanced for our people.

As part of its commitment to Queensland, Suncorp’s insurance business would establish a Disaster Response Centre of Excellence which would monitor, prepare and respond to extreme weather and natural disasters. it would include an employment hub for event workforces.