ACCC unconvinced ANZ-Suncorp deal will deliver public benefits

The competition watchdog says it is so far unconvinced ANZ Bank’s $4.9 billion planned purchase of Suncorp’s banking arm will deliver the public benefits claims put forward by the banking giant, as it calls for more information on the deal.

The Australian Competition and Consumer Commission (ACCC) released a statement on Tuesday about its preliminary views on what would be the biggest transaction in Australian banking since Westpac’s 2008 takeover of St George, if the deal goes ahead.

ANZ has argued its plan to buy Suncorp’s banking arm will deliver public benefits.Credit: Natalie Boog

The watchdog’s decision on the deal will be released in the middle of this year, and the ACCC must weigh up whether there is any substantial lessening in competition in banking, and whether that can be offset by public benefits from the merger.

The ACCC said second-tier banks such as Suncorp played an “essential role” in competing with the big four, and it would need to consider whether taking out a regional bank could remove a “competitive constraint” on the majors. It is particularly focused on the deal’s implications for agribusiness banking, small and medium enterprise banking, home loans and deposits.

While the ACCC did not say whether it would be likely to approve or oppose the transaction, it said it was so far unconvinced by ANZ’s claims that the deal would provide public benefits to Queensland, or to prudential stability.

ANZ has argued the broader public would also benefit because the deal would make ANZ a stronger bank, which would allow it to serve customers more efficiently. However, the ACCC said it did not have the evidence to support this claim.

“I think we’ve said quite clearly in the statement that our preliminary view is that we are not convinced of the extent of the public benefits claimed at this stage,” deputy chair Mick Keogh said.

The ACCC also said it was not clear whether Suncorp would be a stronger insurer without its banking unit, and it was unclear how any such benefits would be passed on to insurance customers.

ANZ shares rose 0.2 per cent to $23.27 and Suncorp shares fell 0.7 per cent to $12.13.

Many investors have been assuming the deal will ultimately get the green light from regulators despite opposition from smaller banks and consumer advocates.

Atlas Funds Management chief investment officer Hugh Dive said the ACCC had faced criticism for allowing deals that led to higher concentration in Australian banking, such as Westpac’s takeover of St George and Commonwealth Bank’s purchase of Bankwest. Even so, Dive said he thought the regulator would ultimately approve this merger. “It probably goes ahead, but they want to be seen as not flagging it through,” said Dive, who has shares in Suncorp and ANZ.

Morningstar analyst Nathan Zaia said it was understandable that the ACCC was looking closely at the deal, but he assumed it would go ahead in part because he thought Suncorp bank customers would be better off as part of a larger group. “A deal like this – it was always going to get a lot of scrutiny,” Zaia said.

ANZ chief executive Shayne Elliott said the bank would examine the regulator’s preliminary views in detail and respond to the matters it had raised. “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,” Elliott said.

Suncorp maintained the view the deal was in the best interests of customers, shareholders and the community, and it would strengthen the nation’s banking and insurance industries. It also said merging its banking unit with a regional bank would not deliver the same benefits as the sale to ANZ.

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