ANZ wins competition tribunal appeal to reverse rejection of $4.9b Suncorp takeover

The Australian Competition Tribunal (ACT) has this morning overturned a decision to reject ANZ's (ASX: ANZ) proposed $4.9 billion takeover of Suncorp Group's (ASX: SUN) banking arm, after determining the merger would be unlikely to adversely affect competition.

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".

The tribunal notes that an increasing use of brokers has "reduced consumer choice frictions" in the home loans market was facilitating greater customer switching, while the increased use of technology and changes to consumer behaviour also has reduced the risk of banks coordinating.

It was also concluded that Suncorp Bank is not a particularly strong competitor in the home loans market, and that regarding agribusiness loans ANZ would "remain constrained by other competitors, in particular NAB and Rabobank".

"Further, Suncorp Bank’s agribusiness offering is not particularly unique or unable to be replicated by other competitors," the tribunal concludes.

"Critically, the tribunal is satisfied the barriers to expansion in agribusiness markets in Queensland are relatively low and therefore following the removal of Suncorp Bank is an independent competitor, there will be other competitors capable of exerting a material constraint on the merged ANZ-Suncorp Bank."

ANZ has welcomed the tribunal's decision to authorise the proposed acquisition. Completion, expected mid-year, is still subject to legislative amendments by the Queensland Parliament regarding the State Financial Institutions and Metway Merger Act, as well as approval by the Federal Treasurer.

"This is a significant milestone and an important step forward in the process, however we still have further conditions to meet," says ANZ chief executive officer Shayne Elliott.

"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."

Suncorp Group chairman Christine McLoughlin says Suncorp will continue to work constructively with the Queensland Government and Federal Treasury to secure the remaining approvals.

She says the tribunal decision reflects the importance of strong, sustainable insurance and banking systems equipped to meet the changing needs of customers, communities and the broader economy.

"It's also a big win for Queensland with both Suncorp and ANZ announcing significant jobs and investment packages as part of the bank sale process," McLoughlin says.

"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 right across Australia and New Zealand.

"Importantly, 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."

She says that post-completion the board remains committed to returning to shareholders any capital that is in excess to the needs of the business.

Suncorp Group CEO Steve Johnston says the sale of the bank will result in Suncorp becoming a dedicated trans-Tasman insurance company at a time when the value of insurance and the need for continued investment in a vibrant private insurance sector had never been greater.

"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," he says.

Bendigo and Adelaide Bank (ASX: BEN), which had indicated to the tribunal its intent to present an alternative merger offer to Suncorp Bank, is critical of today's decision.

"The Bank maintains the view that the proposed merger will lead to a lessening of competition, leaving customers and communities worse off. Bendigo and Adelaide Bank is proud to be an independent regional bank," the company said in a statement.

"We remain focused on our strategy and our purpose of feeding into the prosperity of our customers and their communities, not off them."