Treasurer gives the tick to $4.9b ANZ-Suncorp deal

ANZ Bank’s plan to bulk up in home loans and household deposits by buying Suncorp’s banking arm has cleared its final key hurdle, after Treasurer Jim Chalmers signed off on the $4.9 billion deal.

In a transaction that was first announced almost two years ago, ANZ is looking to expand its presence in Queensland and gain a larger share in the crucial mortgage market by buying Suncorp’s banking division.

Finalising the takeover – the biggest banking deal in Australia since Westpac bought St George in 2008 – has been long and complex.

After ANZ successfully overturned the competition watchdog’s opposition to the takeover through a court challenge earlier this year, Chalmers ticked off on the transaction on Friday morning.

Jim Chalmers has given the tick to the ANZ’s purchase of Suncorp’s bank.Credit: Alex Ellinghausen

As part of the approval, Chalmers announced requirements that will stop ANZ and Suncorp from closing regional branches across Australia for three years. Chalmers said there must also be no net job losses across Australia for three years due to the transaction, and ANZ must make “best endeavours” to join Australia’s Post’s banking network.

ANZ has already pledged there will be no change in the number of Suncorp branches in Queensland for at least three years after the deal is completed, and the bank last year committed to establishing a technology hub in Brisbane with 700 jobs in the state under an agreement with the Queensland government.

‘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.’

Jim Chalmers, Treasurer

The sign-off from Chalmers comes after the Australian Competition Tribunal this year backed the deal to go ahead, despite opposition from the Australian Competition and Consumer Commission.

Chalmers said he had advice from various government agencies that it would not be in the national interest for him to block the deal. He also noted Suncorp was one of the few remaining combined banking and insurance companies in Australia.

“This decision comes after careful consideration, much deliberation and consultation, and a long and thorough process,” Chalmers said.

“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,” Chalmers said.

Investors welcomed the ruling, which will result in ANZ becoming the third-largest mortgage lender in Australia, overtaking National Australia Bank. Suncorp shares gained 3.4 per cent to $17.36, while ANZ shares were flat at $28.29.

ANZ chief executive Shayne Elliott said the decision was a key milestone for the Melbourne-based bank’s plan to push further into Queensland’s market. Elliott said the deal would also help ANZ bulk up in retail banking, allowing it to better compete.

“Queensland is thriving. With strong economic growth, high workforce participation and more interstate migration than any other state or territory, we’re excited about the opportunities Queensland presents for ANZ and our customers,” Elliott said.

ANZ chief executive Shayne Elliott said the decision was a key milestone for the Melbourne-based bank’s plan to push further into Queensland’s market.Credit: Arsineh Houspian

Evans and Partners analyst Azib Khan estimated the deal would improve ANZ’s earnings per share by about 2 per cent over the next three to six years, but it would also add to cost challenges facing the bank.

“We believe the acquisition will add to ANZ’s medium-term cost challenges, and that 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-ROE [return on equity] institutional division,” Khan said.

The final step needed for the acquisition to be completed is for legal changes to come into effect in Queensland. ANZ said it expected the deal would be completed by the end of July.

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