The competition watchdog is seeking more information on ANZ Bank’s plan to buy Suncorp’s banking unit for $4.9 billion, saying that it remains unconvinced the deal will deliver the public benefits claims put forward by the banking giant.
The Australian Competition and Consumer Commission (ACCC) released a statement on Tuesday about its preliminary views on what would be the biggest transaction in Australian banking since Westpac bought St George – if the deal gets the green light from regulators.
ANZ has argued its plan to buy Suncorp’s banking arm will deliver public benefits.Credit:Natalie Boog
The watchdog’s decision on the deal will be released in the middle of this year, and the ACCC must weigh up whether there is any substantial lessening in competition in banking, and whether that can be offset by public benefits from the merger.
In Tuesday’s statement, the ACCC said second-tier banks such as Suncorp played an “essential role” in competing with the big four, and it would need to consider whether taking out a regional bank could remove a “competitive constraint” on the majors. It is particularly concerned about the deal’s implications on agribusiness banking, small and medium enterprise banking, home loans and deposits.
While the ACCC did not say whether it would be likely to approve or oppose the transaction, it said it was so far unconvinced by ANZ’s claims that the deal would provide public benefits to Queensland, or to prudential stability.
ANZ has argued the broader public would also benefit because the deal would make ANZ a stronger bank, which would allow it to serve customers more efficiently. However, the ACCC said it did not have the evidence to support this claim.
“The ACCC’s preliminary view is that the information currently before it is insufficient to substantiate the nature, likelihood and extent of the claimed public benefits, including ANZ’s estimates of future synergies that will be achieved and claims regarding public commitments to investment in Queensland or improvements in prudential stability arising from the Proposed Acquisition,” the statement said.
The ACCC also said it was not clear whether Suncorp would be a stronger insurer without its banking unit, and it was unclear how any such benefits would be passed on to insurance customers.
In late morning trading ANZ shares were down 0.2 per cent at $23.18 and Suncorp shares were 1.6 per cent lower at $12.02.
ANZ chief executive Shayne Elliott said the bank would examine the regulator’s preliminary views in detail and respond to the matters it had raised. “When we announced the acquisition, we acknowledged that there would be questions from government and regulators about the competition aspects of this transaction, and we welcomed that scrutiny,” Elliott said.
Suncorp maintained the view the deal was in the best interests of customers, shareholders and the community, and it would strengthen the nation’s banking and insurance industries. It also said merging its banking unit with a regional bank would not deliver the same benefits as the sale to ANZ.
Morningstar analyst Nathan Zaia said it was understandable that the ACCC was looking closely at the deal, but he assumed it would go ahead in part because he thought Suncorp bank customers would be better off as part of a larger group.
“A deal like this – it was always going to get a lot of scrutiny,” Zaia said.
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