The Australian News

“Shareholders are advised that these preliminary approaches may or may not lead to formal proposals being put to Suncorp,” the company said in a brief statement.

Suncorp said it has appointed Lazard Carnegie Wylie and UBS as advisers.

Shares of Suncorp rose as much as 9 per cent to $11.65 on the news. By late afternoon, its shares were up 58 cents, or 5.4 per cent, at $11.26 in a weaker market overall.

The benchmark S&P/ASX 200 Index was down 3.3 per cent.

Speculation has been rife in financial markets that Suncorp would become a takeover target because of a need to recapitalise its balance sheet in the face of a global financial crisis.

Commonwealth Bank of Australia has been rumoured as one bank interested in the banking division.  ANZ  has also been linked to speculation about Suncorp.

'The attraction of Suncorp is that is has quite a strong position in Queensland, and that is a prize to be had for any of the big four,' said Paul Xiradis, head of equities at funds manager Ausbil Dexia.

'But if you look at which bank is in the strongest position to do so, you would think that would have to be Commonwealth Bank. “

A Commonwealth Bank spokesman declined to comment.

An analyst at a major brokerage agreed Commonwealth Bank was the best placed to buy the operations and said Suncorp's wealth management and banking businesses could be worth $7 billion-$8 billion, with Suncorp likely to be open to talks 'at the right price'.

'They realize that there are concerns over it (the banking arm) that are weighing down their share price,' said the analyst.

The chief of ANZ's Australian operations, Brian Hartzer, said last week the bank's current share price was too weak to consider being a major player in the potential phase of consolidation.

Suncorp chief executive John Mulcahy said last week he thought the bank's change in business model would help reduce the complexity structure and bring down costs of the bank.

Mr Mulcahy said that the bank was well-positioned but would require extensive capital raising to fund its balance sheet in the year ahead.

“Suncorp will require around $4 billion of funding to meet its needs over the next year,” he said. “We're well on track to secure that with over $1.1 billion in private placements completed since June.”

Credit ratings agency Standard & Poor's has placed Suncorp on “credit watch”.