ANZ, Suncorp shares rise as Treasurer approves acquisition
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More news: ANZ and Suncorp shares lifted at the start of trading on the ASX, after Federal Treasurer Jim Chalmers approved the $4.9 billion planned acquisition of Suncorp Bank by ANZ this morning.
ANZ shares were up 0.7% to $28.49 by 10:45am AEST, while Suncorp shares climbed 2.7% to $17.26.
What they said: E&P Capital said it expects "very modest" earnings benefits for ANZ during its planned integration with Suncorp, forecasting earnings per share accretion of around 2% during the next three to six years.
E&P analyst Azib Khan noted the acquisition could add to ANZ's medium-term cost challenges, and the acquisition "will not significantly shift the dial" in terms of ANZ's capital allocation, which sees the greatest percentage of capital being allocated to the "relatively low" return-on-equity institutional division.
He said that ANZ's Australian business banking division is "particularly underweight", and an area that required a "meaningful step-up" in investment in the near term, as well as sustained investment over the medium term.
'Not in the national interest' to block ANZ-Suncorp deal: Chalmers
More news: Federal Treasurer Jim Chalmers said that it would "not be in the national interest" to prohibit ANZ's proposed acquisition of Suncorp Bank, after he approved the planned $4.9 billion merger.
He also said he took into account the "unique features" of the proposal including the fact that Suncorp was one of the few combined bank and insurance companies in Australia.
What they said: "I took seriously the competition concerns raised by the ACCC [Australian Competition and Consumer Commission] as part of its decision on 4 August 2023, but the Australian Competition Tribunal ultimately concluded it would not be likely to have the effect of substantially lessening competition," Chalmers said in a statement.
"As the ACCC has since publicly acknowledged, the Tribunal’s decision demonstrates the checks and balances of an administrative merger approval process.
" ... The proposal will allow Suncorp to focus on its insurance businesses at a time when the sector faces a range of specific challenges, including access and affordability.
"The acquisition has been proposed at a time of significant change in the banking sector, including growing competition from and opportunities in digital banking, and concerns about access to banking services particularly in regional and remote communities.
"To ensure the transaction is in the national interest, I have decided to approve this proposal subject to strict conditions.
"The conditions I have imposed are legally-binding and ensure Australians continue to have access to vital banking services, employees aren’t left behind, and Queensland and Australia benefit from the transaction."
Treasurer Jim Chalmers approves $4.9b ANZ-Suncorp deal
The news: Federal Treasurer Jim Chalmers has approved ANZ's proposed acquisition of Suncorp Bank.
The numbers: ANZ received unconditional authorisation for its planned $4.9 billion acquisition of Suncorp Group's banking arm announced in February, after the Australian Competition Tribunal overturned a previous decision by the Australian Competition and Consumer Commission to oppose the merger.
The context: The approval includes a number of conditions, including for ANZ to maintain its and Suncorp's regional branch numbers throughout Australia for three years. The approval also requires no net job losses in Australia as a direct result of the acquisition over three years, and for ANZ to continue efforts to reach an agreement with Australia Post to offer Bank@Post services to its customers.
ANZ said the conditions are aligned with the commitments it made upon announcing the proposed acquisition.
Completion of the acquisition remains subject to the commencement of the Queensland 'State Financial Institutions and Metway Merger Amendment Act', which is due to amend legislation to facilitate the deal.
The acquisition is expected to be completed by the end of July.
What they said: ANZ's CEO Shayne Elliott said: "We're pleased to be one step closer to this strategically important acquisition which will allow us to add scale to our retail and commercial businesses while enabling ANZ to more effectively compete in the Australian market."
The sources: ASX announcement, Treasury, E&P Capital research
