Asset sales could soon be on the agenda as ANZ vies for Suncorp Bank

ANZ agreed to buy Suncorp’s bank last year for $4.9bn and the acquisition is currently before the Australian Competition & Consumer Commission. Picture: Richard Gosling

As the banking industry awaits a decision on whether ANZ can gain regulatory approval to buy Suncorp Bank, some are preparing for the possibility that it is conditional on compulsory asset sales.

ANZ agreed to buy Suncorp’s bank last year for $4.9bn and the acquisition is currently before the Australian Competition & Consumer Commission.

It also requires approval from Treasurer Jim Chalmers.

Sources say the ACCC could allow ANZ to buy the bank, but on the proviso that Suncorp sells its small to medium enterprise and agriculture loan book, understood to be worth about $11bn.

The remaining home loans within Suncorp’s bank are worth $47bn, and it has $45bn in deposits.

Suncorp’s SME and commercial loans are worth about $7bn, while its loans to the agriculture sector are worth about $4bn.

The argument for such a compromise is that it is easier for home loan customers to switch banks in the residential mortgage market.

However, some say that the major focus of the ACCC is deposits and mortgages, with concerns about the big four banks competing efficiently on deposits and mortgages and a lessening of competition since the merger of St George and Westpac.

ANZ’s advisers are preparing for such scenarios, and may have even sounded out prospective buyers. No doubt plenty of suitors would line up for Suncorp’s commercial loans.

An obvious contender would be Judo Bank, which targets the SME lending market, along with Rabobank, which lends to the agricultural sector.

Banks are taking a tougher stance on poorly performing loans amid an economic slowdown. There were 831 Australian companies that entered administration in March, with most in property and construction, followed by hospitality, accommodation, retail and credit agencies.

This compares to 720 on average between 2016 and 2019.

Rabobank and Judo Bank have made submissions to the ACCC about the ANZ acquisition of Suncorp Bank.

In February, The Australian reported that Judo Bank told the competition watchdog that ANZ’s takeover of Suncorp Bank could lead to “substantial detriment” for small businesses and end customers, as it reduces the number of business lenders in the domestic market. It said it considered Suncorp a vigorous and effective rival, particularly for Queensland SMEs and other customers.

The past three years have seen National Australia Bank buy Citigroup’s local retail operations and digital player 86 400.

Bendigo and Adelaide Bank has acquired Up, Bank of Queensland snapped up ME and start-up bank Volt has returned funds to depositors.

Brisbane-based Bank of Queensland’s submission to the ACCC highlights the transaction’s potential to reduce competition.

Submissions by Rabobank Australia and consulting firm BMAgBiz separately raised concerns about how the deal would impact the agribusiness banking and mortgage markets, particularly in Queensland.

The ACCC is due to make a decision on the deal in June.