ACCC calls for more information over the ANZ-Suncorp sale due to its competition concern

The ACCC isn’t convinced ANZ’s purchase of Suncorp bank will avoid reducing competition in the financial market.

The competition regulator says it’s not convinced about the benefits spruiked by ANZ to win approval for its controversial $4.9bn purchase of Suncorp’s banking business, due to concerns it will impact the market.

The Australian Competition and Consumer Commission on Tuesday said it would demand more information from ANZ and Suncorp over the sale of the bank, while revealing its preliminary views.

The ACCC has wrapped up its review of the home lending and retail deposit businesses at ANZ and Suncorp, and concluded the review of the agribusiness and small and medium-sized enterprises operations of the two.

The ACCC’s approval of the Suncorp bank sale is necessary for the deal to go through, but the regulator’s concern about a lessening of competition in the banking sector is well known.

ACCC deputy chair Mick Keogh said the regulator was signalling to the parties it was “not convinced” of the benefits claimed by ANZ and Suncorp.

ACCC deputy chair Mick Keogh.

ANZ has said the purchase of Suncorp’s bank was essential in light of the “intensively competitive” banking market.

The Melbourne-based bank claims its purchase of Suncorp Bank would not “materially alter” market share or increase concentration in the banking landscape.

ANZ said it expected to bank $260m in cost savings after a three to four-year separation period.

It has committed to no net job losses at Suncorp Bank in Queensland and to not closing the target’s branches in the state for three years.

“We’ve had it put to us there will be a number of public benefits by the parties,” Mr Keogh said.

“We’re not convinced of that. We’re still undertaking a fairly detailed view of the available data we have obtained.”

Mr Keogh said the ACCC’s concerns stemmed from observations in past inquiries “that there is not evidence of strong competition between the four major banks”.

“Some of the second-tier regional banks do exert competition and have had an impact on the behaviour of the major banks,” he said. “We’re talking about a situation where a significant second-tier bank will be taken out.”

Mr Keogh said the ACCC had to consider “counterfactuals’’ about the ANZ-Suncorp tie-up, including a potential proposed merger put forward by Bendigo and Adelaide Bank.

He noted that the deal had “a real commercial likelihood” but the regulator was not aiming to “make a judgment” on that particular deal.

ACCC chair Gina Cass-Gottlieb has recused herself due to previously providing legal advice to Suncorp. Picture: Gary Ramage

“Our judgment is that there is a real commercial likelihood involving Suncorp and one of the other major regional banks and secondary banks,” he said.

Mr Keogh said the ACCC wasn’t aiming to force Suncorp or ANZ to change their approach to the deal, despite signalling its concern.

“We wouldn’t approach it in that fashion. We have had quite a few occasions in the past (where parties) come to us with proposals, legally enforceable undertakings or divestments they are prepared to undertake in order to get the deal progressed,” he said.

“That’s not an unusual situation. Our job is simply to signal whether or not we consider on the basis of the information we have available the transaction will go ahead or not.”

ACCC chair Gina Cass-Gottlieb has recused herself from the deal, having previously provided legal advice to Suncorp while at law firm Gilbert + Tobin.

ANZ chief executive Shayne Elliot said he welcomed the ACCC’s preliminary views.

“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,” he said.

“We welcome the further community consultation that will now occur.”

ANZ said the Suncorp deal would not “substantially lessen competition”.

ANZ chairman Paul O’Sullivan and chief executive Shayne Elliott. Picture: Arsineh Houspian

In addition to ACCC approval, ANZ and Suncorp also needed to secure agreement from the Queensland government and the federal Treasurer.

Queensland laws stipulate Suncorp must maintain its headquarters, as well as senior roles within the bank, in Queensland. Suncorp said it was “engaging constructively with all regulatory and government bodies” in relation to the sale of its bank.

“Suncorp maintains the view that the sale of Suncorp Bank to ANZ is in the best interests of its customers, employees, shareholders, the state of Queensland and the nation, and will result in a stronger insurance and banking system in Australia,” the bank said.

“If the transaction is approved, Suncorp would become a dedicated insurer at a time when the value of insurance to the trans-Tasman economy and the public has never been greater.”

But Suncorp attempted to downplay talk of a Bendigo Bank bid, noting it would “not deliver the same benefits and is inferior to both a sale to ANZ and Suncorp Bank’s own organic plan”. Suncorp shares fell 8c to $12.13, while ANZ rose 5c to $23.27.