On Tuesday, the Australian Competition Tribunal granted approval for ANZ Group’s acquisition of Suncorp’s banking business, valued at A$4.9 billion ($3.2 billion). This decision enables the bank to move forward with the takeover of its major rival.
ANZ and Suncorp appealed the Australian Competition and Consumer Commission’s (ACCC) decision to block the deal in August. They asserted that it would restrict competition in Australia’s banking sector. Subsequently, the tribunal’s ruling approved ANZ’s $3.2 billion acquisition of Suncorp’s bank unit.
On Tuesday, Justice John Halley, deputy president of the Australian Competition Tribunal, informed the Federal Court in Sydney about the deal’s approval. He emphasized that the transaction could proceed, as it demonstrated sufficient “net public benefits.”
He stated that the proposed merger was unlikely to have a significant impact on competition in Australia’s home lending market.
ANZ shares fell 2.2%, while Suncorp stock rose 6%. The S&P/ASX200 (.AXJO) fell 0.08%.
The decision is likely to reignite debate over Australia’s merger laws. Additionally, it will fuel the ACCC’s push for stronger powers and new rules to make it easier to block anti-competitive deals. Treasury launched a two-year review of merger rules in August.
The Australian Treasurer Jim Chalmers must still approve the takeover, and it also requires endorsement from the Queensland government, where Suncorp is headquartered.
If the deal is finalized, Melbourne-based ANZ, which has lagged behind its larger rivals in home lending, will have the opportunity to expand its loan book. This comes at a time when banks are grappling to attract new borrowers following a string of interest rate hikes.
“This is a significant milestone and an important step forward in the process, however we still have further conditions to meet,” ANZ Chief Executive Shayne Elliott said in a statement. “We remain committed to completing the acquisition as soon as possible once all sale conditions are met.”
In a statement, Chalmers expressed his intention to carefully and methodically assess the proposed acquisition’s alignment with national interests. He emphasized this commitment after the bank formally sought approval.
FIRST MAJOR LOSS FOR ACCC BOSS
Suncorp CEO Steve Johnston announced that the decision has been made, stating that it would enable the diversified financial firm to transform into a “dedicated Trans-Tasman insurance company.” Simultaneously, this move aims to streamline and reduce its current business model.
Suncorp’s Chairman, Christine McLoughlin, stated that selling the bank would reduce the company’s capital requirements. She also mentioned that any remaining excess capital would be returned to shareholders.
The tribunal’s decision is ACCC chairperson Gina Cass-Gottlieb’s first major setback since taking over the competition regulator nearly two years ago. In the previous year, the ACT backed the ACCC in rejecting an appeal from Telstra and TPG regarding a A$1.8 billion network-sharing deal. The ACCC had initially denied the deal, and the ACT supported this decision.
“Banking markets are critical for many homeowners, businesses and farmers. The ACCC will continue to apply scrutiny to these markets across the breadth of our functions including merger assessments and enforcement investigations,” Ms Cass-Gottlieb said in a statement on Tuesday.
Last year, the ACCC declared that permitting the deal to advance would “further entrench an oligopoly market structure.” In this structure, four lenders, including ANZ, govern three-quarters of the country’s A$2 trillion in home loans.
Australia’s fourth-largest bank by market capitalization, ANZ, declared in 2022 that the acquisition of Suncorp’s banking assets would expand its mortgage book by A$47 billion to A$307 billion. This strategic move aimed to strengthen ANZ’s position in the market.
Despite the positive ruling, analysts question whether ANZ’s acquisition of Suncorp’s bank will result in a significant increase in its home lending market share.
In 2022, ANZ, Australia’s fourth-largest bank by market capitalization, initially announced the Suncorp transaction. The bank stated that acquiring the banking assets would boost its mortgage book by A$47 billion to A$307 billion.
“To put the size of the acquisition into context, we previously estimated Suncorp Bank profit would add around 5% to ANZ Group’s profit. We don’t view this as a transformational, make or break type acquisition for ANZ,” Morningstar analyst Nathan Zaia told Reuters via email.
Click here for Business news.
Click here for Banking news.