ANZ shares down while Suncorp, Bendigo and Adelaide Bank lift
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More news: ANZ shares were down 3.5% by 1:07pm AEDT following the news that the Australian Competition Tribunal would allow it to acquire Suncorp Bank.
However, Suncorp’s shares were up 6.06% along with Bendigo and Adelaide Bank shares that were up 1.85%.
What they said: Morningstar bank analyst Nathan Zaia said the acquisition would add scale to areas where ANZ trailed compared to its major bank peers as home loans balances would increase by 18%, customer deposits by 14%, and business lending by 9% (but likely closer to 20% in SME lending).
“Consolidating systems and processes should help lower the cost base, and we see potential for some funding cost savings over time given ANZ’s better credit rating. The integration risks are worth taking in our view,” Zaia said.
“We think ANZ will be able to leverage investment in technology and processes, ensuring it can hold market share and begin to generate better profits on its loan book. If ANZ can lower its cost/income ratio on the back of this deal, we don’t think the strategy would be to give up the gains by lowering rates and winning market share. Competitors will push back, and it just means lower returns for everybody.”
Zaia noted that ANZ was much smaller than Commonwealth Bank and Westpac and the acquisition would not give it a cost advantage that could be used to take market share or outspend on digital offerings.
“ANZ’s size is not the reason the bank had been losing market share, it was slow progress on building an efficient home loan processing capability,” he said.
“To put the size of the acquisition into context, we previously estimated Suncorp Bank profit would add around 5% to ANZ Group’s profit. We don’t view this as a transformational, make or break type acquisition for ANZ.”
ACCC to continue banking industry scrutiny after ANZ-Suncorp loss
More news: The Australian Competition and Consumer Commission (ACCC) has said it will continue to scrutinise banking markets following a decision by the Australian Competition Tribunal to set aside its rejection of the ANZ-Suncorp Bank acquisition.
As the regulator reflected on today's decision, it said it would continue to monitor banking markets in its merger assessments and enforcement investigations.
What they said: “The ACCC notes the decision and will reflect on it. The tribunal’s decision demonstrates the checks and balances of an administrative merger approval process," ACCC chair Gina Cass-Gottlieb said.
“The tribunal made findings on fundamental matters that informed our concerns, including that the national market for home loans is currently conducive to coordination and that material barriers to entry and expansion remain.
"However, the tribunal didn’t consider that the proposed acquisition would meaningfully impact on the likelihood of coordination."
The ACCC's fear is that the deal increases the likelihood of banks pricing and reacting to the market in concert, without explicitly colluding.
Suncorp Group welcomes approval of bank sale to ANZ
More news: Suncorp Group chair Christine McLoughlin also welcomed the news and said the Tribunal's decision is a win for Queensland, with both ANZ and Suncorp planning "significant jobs and investment packages".
What they said: “Suncorp’s package, worth around $25 million, will not only bring continued investment and jobs in the state of Queensland but through further investment in our end-to-end disaster management capability and natural hazard resilience initiatives, will bring benefits to customers and communities right across Australia and New Zealand,” McLoughlin said.
Suncorp Group CEO Steven Johnson said the sale of the bank would result in Suncorp becoming a dedicated Trans-Tasman insurance company.
“Our ability to meet the rapidly evolving needs of insurance customers and address increasingly complex challenges such as climate change and affordability will be significantly strengthened through dedicated investment as a pureplay insurance company," he said.
ANZ welcomes successful appeal on Suncorp Bank acquisition
More news: ANZ has welcomed the Australian Competition Tribunal’s decision to allow it to acquire Suncorp Bank.
The acquisition is still subject to legislative amendments by the Queensland Parliament and approval by the Federal Treasurer.
What they said: ANZ chief executive Shayne Elliott said the decision was a significant milestone and an important step forward.
“Suncorp Bank is a high-quality business with a strong team and excellent customer base, and we look forward to bringing them access to the best of ANZ, including our platforms and technology,” he said.
“We strongly believe that the acquisition presents significant opportunities for ANZ, Suncorp Bank and our customers, as well as major public benefits including for Queensland.”
ANZ-Suncorp deal gets green light from competition tribunal
The news: ANZ has gained unconditional merger authorisation for its planned acquisition of Suncorp Group's banking arm.
The three-person review panel making up the Australian Competition Tribunal today set aside a previous decision by the competition regulator to block the deal.
The numbers: The ACCC began its merger authorisation review in December 2022, having received an application from ANZ in relation to its $4.9 billion bid for Suncorp Bank.
The context: The ACCC announced its decision to oppose the merger last August, citing competition concerns.
The regulator had also positioned Bendigo & Adelaide Bank as a "counterfactual" alternative bidder for Suncorp Bank.
Bendigo had voiced its opposition to the deal over competition concerns in the home loans and regional agribusiness markets in Queensland.
Today's decision comes at a key point in an ongoing government inquiry of the merger review process, with the ACCC wanting to see the Tribunal as the main port of call for any appeals.
The ACCC could still decide to apply for an appeal of the tribunal's decision before the Federal Court.
The sources: The Australian Competition Tribunal, ASX announcement, ASX announcement
