ANZ will have a much easier time convincing investors about the merits of a $4.9 billion takeover of Suncorp’s bank than it will about buying accounting software group MYOB.
But convincing the new chair of the Australian Competition and Consumer Commission, Gina Cass-Gottlieb, may be another thing entirely.
The deal looms as the first major test for Cass-Gottlieb. But although the idea that the power of the big four should not be increased is almost a foundational philosophy for the watchdog, proving ANZ’s takeover will result in a substantial lessening of competition will be more complex.
Former ACCC chairman Graeme Samuel approved Australia’s last major bank takeovers – Commonwealth Bank’s acquisition of BankWest and Westpac’s purchase of St George – through gritted teeth, given the turmoil the smaller groups faced in the GFC left him little choice. But as far back as 2010, he warned any further mergers between a big four bank and a regional rival would face intense and possibly insurmountable scrutiny.
Samuel’s successor, Rod Sims, regularly bemoaned the lack of competition in the banking sector and conducted inquiries into mortgage competition in 2018 and 2020. The ACCC even set up a Financial Services Unit that was (comically) asked by the Coalition government to make recommendations to improve banking competition every six months.
All of which would appear to make it easy for the ACCC to knock back ANZ’s Suncorp takeover. But data from the prudential regulator suggests that the actual impact on competition will be relatively small.
While the big four’s share of home lending is 75.2 per cent, ANZ is the laggard of the bunch with a 13.1 per cent share. Suncorp is the smallest regional bank with a 2.3 per cent share, meaning the pair’s combined share of 15.4 per cent would be way behind CBA (market leader with 26 per cent) and Westpac (21.6 per cent).
Deposit market shares are broadly similar, with ANZ holding 13.3 per cent and Suncorp holding 1.7 per cent. ANZ’s combined deposit share post-merger of 15 per cent would rank it fourth of the big four, behind third-placed NAB with a 16.9 per cent share.
Three competitors down to two is clearly a substantial lessening of competition. Four down to three also meets the criteria in banking.
But seven (the big four plus Bendigo & Adelaide Bank, Bank of Queensland and Suncorp) down to six is a harder case to make.
Although that probably won’t prevent Cass-Gottlieb from trying.
More on the ANZ-Suncorp deal
- ANZ to buy Suncorp bank in $4.9b ‘cornerstone’ deal. ANZ confirmed it will raise $3.5 billion to finance its $4.9 billion purchase of Suncorp’s bank and pledged to keep branches open for three years.
- ANZ’s ‘once-in-a-lifetime’ deal comes with complexity. Shayne Elliott says seven years of simplification has set ANZ up for the $4.9 billion acquisition of Suncorp’s bank. But with deal making and growth comes complexity around execution, writes Chanticleer columnist James Thomson.
- Macquarie, UBS launch ANZ Bank’s $3.5b raising. ANZ Banking Group is offering new shares at a 12.7 per cent discount to the last close in an effort to raise $3.5 billion to acquire Suncorp’s bank.
- Shayne Elliott’s banking epiphany. ANZ’s tilt at Suncorp is a way for the Melbourne-based lender to claw back some of the share it has ceded in the crucial home lending market over the past four years, writes columnist Karen Maley.
- ANZ/Suncorp deal will be first test for new ACCC boss. The watchdog has long bemoaned the market power of the big four banks, but proving that an ANZ takeover of Suncorp will substantially lessen competition may prove complex, writes Chanticleer columnist James Thomson.
- ANZ’s $5b tilt at Suncorp puts spotlight on competition. The big four institution has swooped on the insurer’s bank to bolster larger player’s languishing home loan division if the deal passes political hurdles.
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