Legacy questions confront ANZ and Suncorp over bank deal

The failure of ANZ to secure approval from the ACCC over the sale of Suncorp Bank poses legacy questions for the two big bosses behind the deal.

ANZ’s Shayne Elliot with his Suncorp counterpart Steve Johnston. Picture: Arsineh Houspian

After seven years, eight months and counting, Shayne Elliot is among the longest-serving leaders of corporate Australia and now faces a choice between guiding ANZ through its battle with the competition regulator over the purchase of Suncorp – or leaving the job to his successor.

After replacing Mike Smith in the top job in 2016, Mr Elliott is credited with turning the unwieldy entity bequeathed to him into a slimmer, more effective ­operation.

But the bid to buy Suncorp Bank last year may weigh on the lender as it considers Mr Elliott’s successor and the veteran banker’s legacy.

Mr Elliott and ANZ’s board are faced with the question of how to handle the Suncorp Bank blow-up after the ACCC blocked the $4.9bn buyout on Friday.

Suncorp has a similar problem. The Brisbane-based group is now faced with being forced to retain a bank it doesn’t want and its hopes of slimming down to a pure-play insurer dashed.

Steve Johnston took on the top job at Suncorp in 2019 and he faces the legacy question as the deal to sell the bank hangs in the balance.

Pengana Capital chief investment officer Rhett Kessler said ANZ under Mr Elliott had performed well, with a leading institutional operation under Mike Whelan and a No.1 New Zealand lender under Antonia Watson.

“These two businesses represent the bulk of where shareholder value is being created, and should the merger ultimately be disallowed that would simplify my investment case,” he said. “The bigger issues facing the business is if Shane is going to be succeeded, who is that going to be? That’s where I don’t have real clarity.” Mr Kessler said Mr Elliott had done a “reasonable job in some of the most challenging macro environments” as CEO. “We forget that he took over at a time when running ANZ was considered a ­really tough gig,” he said.

Mr Elliott is thought to have considered the Suncorp deal a top priority at the bank.

But sources indicate the bank is putting more energy into the technological transformation as part of the ANZ Plus program.

Buying Suncorp forms part of ANZ’s bigger growth plans, with the potential 1.2 million customers adding weight to the returns the tech transformation would bring.

Clime Asset Management chief investment officer Will Riggall said Mr Elliott’s big legacy at ANZ would be the bank’s new technology. “Shane is seen as No.3 of the four big bank CEOs. This was the opportunity to cement his legacy,” he said. “If you improve your infrastructure you have to show how scalable that it is – this was the opportunity to show it.”

But he warned ANZ and Suncorp would face an uncertainty discount as the two grappled with the outcome of the deal and their potential leadership transition.

“Both groups do a very good job of managing the legacy and people who are next to take over, but there’s a higher risk at Suncorp than ANZ,” he said.

Tyndall Asset Management head of equities Brad Potter said the sale of Suncorp Bank was far more transformational for Suncorp than it was for ANZ.

“Suncorp was also going to have a reasonable amount of legacy costs that were going to hang around a lot longer,” he said.