ANZ wins green light for $4.9b Suncorp bank takeover on appeal

A rapidly growing “maverick” competitor to the big four banks, Macquarie, has helped ANZ get its $4.9 billion takeover of Suncorp’s banking arm over a key hurdle after the Australian Competition Tribunal overturned the competition watchdog’s veto of the deal last year.

While ANZ must still get approval for the takeover bid from Treasurer Jim Chalmers and wait for some laws to be amended in Queensland, where Suncorp is based, the tribunal’s ruling was a significant win for the country’s fourth-largest bank.

On Tuesday, Justice John Halley said the merger between ANZ and Suncorp was unlikely to substantially lessen competition in the banking sector after the Australian Competition and Consumer Commission (ACCC) last year rejected the takeover, saying it would further entrench the country’s banking oligopoly.

ANZ chief executive officer Shayne Elliott said the tribunal’s decision was a significant milestone for the planned deal.Credit: Michaela Pollock

“The tribunal has concluded that the small increase in the market share of ANZ, if the proposed acquisition proceeds, would not have a meaningful impact on the degree or likelihood of the major banks engaging in successful coordination,” Halley said.

ANZ first made a bid for Suncorp’s bank in July 2022 as part of a plan to expand in retail banking. If executed, it will be the biggest transaction in Australian banking since Westpac’s 2008 takeover of St George.

But the ANZ’s initial bid was rejected by the ACCC in August last year, with the competition watchdog saying there would be an increased likelihood of coordination between the four major banks in the supply of home loans if Suncorp became part of ANZ.

The tribunal’s determination was based on two key tests, of which it said at least one needed to be satisfied for the proposed acquisition to proceed and for the ACCC’s decision to be overturned. The first was that the deal would not be likely to substantially lessen competition, and the second was that the public benefits of the deal would outweigh its public detriment.

Halley said the tribunal was satisfied Suncorp was not a particularly strong competitor in the home loans markets and that the ANZ-Suncorp merger was not likely to substantially lessen competition in the home loan market or Queensland’s agribusiness market.

“The conditions for co-ordination have recently reduced and are likely to continue to reduce in the foreseeable future,” he said, flagging the discrepancy in market shares of the major banks, the increased use of brokers and the emergence of investment behemoth Macquarie as a “maverick” in the market.

Macquarie’s banking arm has rapidly increased its home lending market share over recent years, growing from 2.5 per cent in 2020 to about 5.3 per cent in 2023. The bank flagged at its earnings update last week that it saw an opportunity to “dramatically increase” its market share in the home loan market at a time when several other banks are pulling back amid intense competition.

Halley also said the tribunal was satisfied that the proposed acquisitions’ predicted integration and production efficiencies would provide public benefits that outweighed any reduction in competition.

Halley said the likelihood of an alternative scenario – a merger between Bendigo and Adelaide Bank and Suncorp – cited in the ACCC’s decision was “far from certain” and would face significant execution challenges.

ANZ chief executive officer Shayne Elliott said the tribunal’s decision was a significant milestone and important step in the takeover process but that the bank had further conditions to meet.

“We remain committed to completing the acquisition as soon as possible once all sale conditions are met,” he said in a statement on Tuesday.

Completion of the deal remains subject to legislative amendments by the Queensland parliament. It also needs approval by the federal treasurer.

In a media release following the tribunal’s decision, Treasurer Jim Chalmers said he would “carefully and methodically” consider whether the proposed acquisition was in the national interest under the Financial Sector (Shareholdings) Act upon receiving an application from ANZ and receiving Treasury advice, and that he would announce a decision in due course.

The ACCC can appeal the tribunal’s decision, but only on the basis of an error of law.

Clayton Utz competition partner Kirsten Webb said the ACCC was an experienced regulator but that “reasonable minds can differ” with contentious mergers. “The ACCC, which often heavily focuses on theoretical concerns, might not always get it right,” she said.

In a letter to employees, Bendigo and Adelaide Bank chief executive Marnie Baker said the proposed merger would lead to a lessening of competition, leaving customers worse off.

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