The Tribunal’s deputy president, Justice John Halley on Tuesday ruled against the Australian Competition and Consumer Commission’s (ACCC) rejection of the takeover, saying the deal was unlikely to lessen competition in the country’s banking sector.
The Tribunal is the review body for authorisation decisions made by the ACCC.
In August 2023, the ACCC blocked ANZ’s proposed buyout of Suncorp’s banking division on the grounds it would worsen competition in home loans and retail deposits as well as business and agricultural banking.
Australia’s big four, which includes ANZ, collectively command more than three-quarters of the country’s residential home lending market.
The buyout would add almost $60 billion in customer loans to ANZ’s balance sheet. The transaction includes Suncorp’s $47 billion of home loans, $45 billion deposits, and $11 billion commercial loans.
Suncorp (SUN) currently has a market cap of more than $19 billion, with its share price rallying after the news.
“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,” ANZ chief executive officer Shayne Elliott said.
The takeover remains subject to the amendment of the State Financial Institutions and Metway Merger Act and final approval from the Federal Treasurer. If received, the sale of Suncorp Bank is expected to be completed around mid-2024.
Merger to benefit Queensland
Suncorp Group chairperson Christine McLoughlin welcomed the Tribunal’s decision, saying the bank’s sale would bring in significant jobs and investment to Queensland.
“Suncorp’s package, worth around $25 million, will not only bring continued investment and jobs in the state of Queensland but, through further investment in our end-to-end disaster management capability and natural hazard resilience initiatives, will bring benefits to customers and communities across Australia and New Zealand,” Ms McLoughlin said.
“Our bank customers will have access to a wider range of products and services, and our people a broader range of banking career opportunities under ANZ, which has committed to maintaining and growing Suncorp Bank’s strong Queensland presence.”
ANZ entered an agreement to purchase Suncorp’s banking unit in July 2022 to accelerate the growth of its retail and commercial businesses in the Sunshine State.
“We strongly believe that the acquisition presents significant opportunities for ANZ, Suncorp Bank, and our customers, as well major public benefits for Queensland,” Mr Elliott said.
It would also allow it to compete better with its four pillars compatriots CBA, NAB and Westpac.
ANZ is currently fourth-largest with more than $700 billion in residents' assets, versus the trillion-dollar-apiece club of Westpac and Commonwealth Bank, and NAB not far behind at more than $950 billion.
The sale of the bank would result in Suncorp becoming a dedicated Trans-Tasman insurance company.
“Our ability to meet the rapidly evolving needs of insurance customers and address increasingly complex challenges such as climate change and affordability will be significantly strengthened through dedicated investment as a pureplay insurance company,” Suncorp Group chief executive officer Steve Johnston said.
Ms McLoughlin, meanwhile, assured shareholders would receive any capital that was more than the needs of the business.
ACCC to ‘reflect’ on the Tribunal’s decision
The ACCC said last year that allowing the deal would “further entrench an oligopoly market structure that is dominated by four major banks”.
However, the competition watchdog acknowledged the Tribunal’s reversal of its ruling, saying it “notes the decision and will reflect on it”.
“The Tribunal made findings on fundamental matters that informed our concerns, including that the national market for home loans is currently conducive to coordination and that material barriers to entry and expansion remain,” ACCC chair Gina Cass-Gottlieb said.
The Tribunal has jurisdiction under the Competition and Consumer Act to hear reviews of determinations of the ACCC granting or refusing authorisation for company mergers and acquisitions.
In conducting its review, the Tribunal applies the same ‘authorisation test’ as the ACCC and is generally limited to the information that was before the ACCC.
Based on its review of the material, and some limited new information, the Tribunal has concluded that it is satisfied that ANZ’s Suncorp buyout would not result in a substantial lessening of competition in any relevant market.
“However, the Tribunal didn’t consider that the proposed acquisition would meaningfully impact on the likelihood of coordination,” Ms Cass-Gottlieb noted.
Is it good for customers?
Bendigo and Adelaide Bank, which made an alternative proposal to acquire Suncorp Bank, likewise acknowledged the Tribunal’s decision, but not without saying allowing the merger would be bad for the banking sector.
“The Bank maintains the view that the proposed merger will lead to a lessening of competition, leaving customers and communities worse off,” bank spokespeople said following the announcement.
Bendigo made an offer last year to merge with Suncorp's banking division, resulting in a combination of two regionals that “would be substantially stronger against major banks”.
However, the deal between the two regional banks was more difficult as they are similar in terms of asset size and market capitalisation.
Any material changes to Suncorp banking products would likely take years; for example, NAB first announced the acquisiton of Citi Australia's retail banking arm in August 2021, with the closure of Citi banking products only now nearing completion in late February 2024.
ANZ and Suncorp merger: A timeline
July 2022: ANZ entered an agreement to purchase Suncorp Bank
2 December 2022: The ACCC received the application for merger acquisition from ANZ to acquire Suncorp Bank
4 April 2023: The ACCC released a statement of preliminary views of the proposed takeover
4 August 2023: The ACCC denied authorisation for ANZ to acquire Suncorp’s banking division
25 August 2023: ANZ and Suncorp appealed to the Australian Competition Tribunal to review ACCC’s determination
27 November 2023: Bendigo and Adelaide Bank reaffirmed its desire to acquire Suncorp Bank
20 February 2024: The Australian Competition Tribunal granted authorisation for ANZ’s $4.9 billion proposed acquisition of Suncorp’s banking business
Upcoming: Federal Treasurer approval and approval and amendments to the State Financial Institutions and Metway Merger Act 1996 (Qld)
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