ACCC Provides Insights on ANZs Plan to Acquire Suncorp Bank

Highlights:

• ACCC has provided initial insights on ANZ Banking Group's plan to acquire Suncorp Group's banking division.
• Suncorp Group Limited confirmed that it is engaging constructively with all regulatory and government bodies regarding ANZ’s merger.
• According to Suncorp, a merger with another regional bank would not provide equivalent advantages and would be less favorable than either a sale to ANZ.

According to recent reports, the Australian Competition & Consumer Commission (ACCC) has provided initial insights on ANZ Banking Group's (ASX: ANZ) plan to acquire Suncorp Group's banking division (ASX: SUN). The ACCC has been primarily focused on home loans and retail deposits, SME banking, and agribusiness banking. The aforementioned areas are the ones that have received the most attention and concerns from stakeholders.

ACCC's Focus Areas

The ACCC is also analyzing how the proposed acquisition could impact the competition in the banking sector in general. ACCC Deputy Chair, Mick Keogh, stated that the inquiry reports of 2018 and 2020 have shown that competition between the four major banks has been mostly subdued. Any acquisition of a prospective rival by a major bank must be closely examined.

The ACCC has requested additional feedback from both the industry and consumers regarding the potential effects of ANZ Banking Group's proposed acquisition of Suncorp Group's banking division, particularly in relation to competition, lending rates, deposit rates, fees and charges, consumer choice, service levels, and innovation. After considering submissions from interested parties and consumers, the ACCC will conclude its review and announce its decision in mid-June.

Request for feedback from stakeholders

According to Mr. Keogh, the ACCC is interested in receiving feedback from stakeholders regarding any potential public benefits resulting from the acquisition. However, the ACCC can only authorise the acquisition if it determines that there will be no significant decrease in competition, or if any public benefits outweigh any negative effects. Submissions to the ACCC can be made until 18 April 2023.

 Criteria for approval by the ACCC

Suncorp Group Limited confirmed that it is engaging constructively with all regulatory and government bodies regarding ANZ’s merger authorisation application to acquire Suncorp Bank. The statement made by the company indicated that the issuance of the Statement of Preliminary Views by the ACCC is a regular part of the authorisation process. The final decision from the ACCC is expected to be announced on June 12, 2023. Suncorp has acknowledged the comprehensive assessment required for ANZ's acquisition application and has expressed its support for the regulatory process by submitting a comprehensive response to the concerns raised in the Statement of Preliminary Views.

The company maintains its belief that the sale of Suncorp Bank to ANZ would benefit its customers, employees, shareholders, the state of Queensland, and the nation, resulting in a stronger insurance and banking system in Australia. If the acquisition is approved, Suncorp would become a dedicated insurer, a significant move given the importance of insurance to the Trans-Tasman economy and the public. Suncorp intends to provide a detailed response to the submission made by Bendigo and Adelaide Bank.

Suncorp's response to ANZ's acquisition proposal

According to Suncorp, a merger with another regional bank would not provide equivalent advantages and would be less favorable than either a sale to ANZ or Suncorp Bank's organic strategy. The Queensland Government's approval under the State Financial Institutions and Metway Merger Act and the Federal Treasurer's approval are also required, in addition to the ACCC's approval. Suncorp appreciates the Queensland Government's constructive approach in working with both Suncorp and ANZ to ensure that the proposed acquisition will have positive outcomes for Queensland and the wider public. Suncorp is fully committed to Suncorp Bank while the approval process is ongoing, and the expected timeline for completion is the second half of 2023.

Suncorp still plans to return the majority of net proceeds in excess of business needs to shareholders after completion. ANZ and Suncorp announced the acquisition agreement in September 2022. ANZ agreed to pay AU$2.5 billion to acquire Suncorp Bank's deposits, mortgages, and small business lending portfolio. The completion of the transaction is contingent on obtaining regulatory approval and is anticipated to take place in the latter half of 2023.

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