The Australian Competition Tribunal has overturned, on appeal, an earlier decision preventing the “big four” bank, ANZ, from acquiring the banking business of Suncorp.
The decision paves the way for a $4.9 billion takeover, setting up Australia’s largest merger in the banking industry since the 2008 Global Financial Crisis.
Fears that such a move would “further entrench an oligopoly,” and reduce competition in the Queensland home loans, agri, and business banking markets led the Australian Competition and Consumer Commission to reject the bid in August 2023.
The ACCC said that second-tier banks like Suncorp, provide “an important source of competitive pressure on the major banks.”
In overturning the ACCC’s findings, the Australian Competition Tribunal found the deal would not impact competition to any great degree, not significantly increase ANZ’s market share, and would create many benefits for the consumer.
In releasing the decision, Justice John Halley, the Tribunal’s Deputy President said there would be no increase in risk to a “vulnerable” home loan market from coordination between the banks;
“The tribunal has concluded that the small increase in the market share of ANZ, if the proposed acquisition proceeds, would not have a meaningful impact on the degree of likelihood of the major banks engaging in successful coordination.”
Originally an insurer, Suncorp’s loan book now totals around $67 billion, and its home loan lending is expected to be absorbed by ANZ, which has renewed its focus on that market.
ANZ is the country’s fourth-biggest lender in the home loan space, and the bank announced in 2022 that a merger would push its mortgage book north of $300 billion.
Federal Treasurer Jim Chalmers still had to ratify the acquisition against conditions outlined in the Financial Sector (Shareholdings) Act after considering the benefits to the Australian public.
“Once I receive ANZ’s FSSA application and Treasury advice, I will carefully and methodically consider whether the proposed acquisition is in the national interest under the FSSA and then announce a decision in due course,” Mr. Chalmers said in a statement.
Whilst describing the decision as “a significant milestone, ”ANZ Chief Executive Shayne Elliott said there was still a lot of box-ticking to get the merger over the line.
“We remain committed to completing the acquisition as soon as possible once all sale conditions are met. Suncorp Bank is a high-quality business with a strong team and excellent customer base, and we look forward to bringing them access to the best of ANZ, including our platforms and technology.
“We strongly believe that the acquisition presents significant opportunities for ANZ, Suncorp Bank, and our customers, as well as major public benefits including for Queensland,” Mr. Elliott said.
The decision impacted early trading this morning on the ASX where Suncorp’s shares were up 6.4 percent at $15.35, conversely, ANZ shares fell by 1.8 percent to $27.98, a drop analysts are putting down to a share buyback activity from investors reacting to the news.
Speaking with the Australian Financial Review, Suncorp chairwoman Christine McLoughlin said the company’s board was “committed to returning to shareholders any capital” left over after the needs of the business were met.
CEO Steve Johnston said the decision would strengthen Suncorp’s core insurance business in the face of challenges including climate change and the cost of living crisis.
