Decks Cleared for ANZ to Acquire Suncorp Bank in Australia

In a first of its kind ruling, the Australian Competition Tribunal on Tuesday overturned an Australian Competition Consumer Commission (ACCC) ruling in August last year, which rejected ANZ Banking Group’s proposal to acquire the Queensland-based Suncorp Bank for $3.22 billion.

While Suncorp is Queensland’s leading bank and the sixth largest bank in Australia, ANZ is the fourth largest. ANZ first made a bid for Suncorp’s bank in July 2022 as part of a plan to expand in retail banking.

If the takeover is cleared by Queensland government, the merger will be the biggest in Australia’s banking sector since Commonwealth Bank took out ailing Bankwest during the global financial crisis in 2008.

Commonwealth Bank acquired the struggling British bank HBOS’s Australian unit BankWest and other assets for $1.5 billion, to boost its market share in fast-growing Western Australia.

PICTURE SOURCE: The Adviser

Significant Milestone

Welcoming the Tribunal’s decision, ANZ chief executive officer Shayne Elliott said that this was a significant milestone and an important step forward in the process. However, we still have further all sale conditions are met, he said.

“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 its customers, as well as major public benefits including for Queensland,” Elliott added.

On 4 August 2023, the ACCC denied an application for the merger through a proposal to acquire 100% of the shares of SGBH Limited (which owns 100% of the shares of Suncorp Bank) from Suncorp Group Limited (Suncorp).

Most recently, the Tribunal affirmed the ACCC’s determination dismissing the application for merger authorisation in respect of the proposed acquisition by Telstra Corporation Limited of TPG Telecom Limited on 21 June 2023.

Funding Challenges

The ANZ and Suncorp Bank merger is likely to trigger more consolidation in the banking sector as access to funding could be a further challenge to the Australian banks, Deloitte Australia said in a report last year.

The Federal Government’s pandemic stimulus through the RBA Term Funding Facility (TFF) matures requiring banks to source alternative funding potentially reducing liquidity/demand for Australian bank/non-bank debt in debt capital markets.

Another challenge facing Australia’s major banks is across the Tasman, with the Reserve Bank of New Zealand (RBNZ) commencing the roll-out of their new, higher capital requirements.

This will see the four largest banks in NZ (Australia’s big 4 banks) required to hold 18% capital by 20281. This punitive capital position may result in banks re-evaluating their size and position in the NZ market due to the implicit reductions in return on equity, all else being equal.

Australian banks have almost completed their exit from Asian investments after a long period of trying to exit these positions.