ACCC denies $4.9b ANZ approval for takeover of Suncorp

Sheep Central August 4, 2023
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THE Australian Competition & Consumer Commission has denied ANZ the authorisation to takeover Suncorp’s banking arm, citing concerns about the concentration of agribusiness banking in parts of Queensland.

ANZ announced its $4.9b agreement with Suncorp in July last year, with plans to take over all its branches in Queensland. The deal was then lodged with the ACCC in December last year.

ACCC deputy chair Mick Keogh announced today that the organisation was not going to approve the deal.

“We are not satisfied that the acquisition is not likely to substantially lessen competition in the supply of home loans nationally, small to medium enterprise banking in Queensland, and agribusiness banking in Queensland,” Mr Keogh said.

“Second-tier banks such as Suncorp Bank are important competitors against the major banks, especially because barriers to new entry at scale into banking are very high. Evidence we obtained strongly indicates that the major banks consider the second-tier banks to be a competitive threat.

“The proposed acquisition of Suncorp Bank by ANZ would further entrench an oligopoly market structure that is concentrated, with the four major banks dominating. It also limits the options for second-tier banks to combine and strengthen in a way that would create a greater competitive threat to the major banks.”

Concerns about agribusiness banking

Along with concerns about home loans and small to medium-sized business banking, Mr Keogh said the deal would have impacted agribusiness banking.

Mick Keogh

“We found agribusiness banking to have a strong local focus, with bankers typically visiting farmers and developing a detailed understanding of their requirements. We found agribusiness customers value specialised banking services with local knowledge and industry expertise,” he said.

“Suncorp Bank is a vigorous agribusiness banking competitor in many local areas of Queensland, and in particular competes strongly and directly against ANZ in areas such as Ayr, Bundaberg, Cairns, Dalby, Emerald, Mackay, Rockhampton, Roma, Goondiwindi, Townsville, and Toowoomba.

“Agribusiness banking services in Queensland are already concentrated. Removing Suncorp Bank’s independent presence will likely lead to worse offerings being made to Queensland farmers.”

Potential to merge with Bendigo and Adelaide Banks

In order to assess the competitive impact of a proposed acquisition, the ACCC said it  considered the likely future state of competition with and without the proposed acquisition.

“In considering the likely outcomes if ANZ does not acquire Suncorp Bank, the ACCC considers there are two commercially realistic potential scenarios; that Suncorp Bank largely continues as it is now or that it merges with or is acquired by a second-tier bank, specifically Bendigo and Adelaide Bank,” Mr Keogh said.

“Suncorp Group’s own documents show that these were the two options that it considered as alternatives to the proposed sale of its banking arm to ANZ.”

ANZ still pursuing takeover

ANZ responded to the decision with its own media statement, which said it still planned to pursue the takeover of Suncorp.

The bank pointed out that under Australian competition law, a decision by the ACCC to not grant authorisation can be reviewed by the independent Australian Competition Tribunal. It also said that in addition to authorisation under Australia’s competition laws, the acquisition remains subject to additional conditions including approval from the Federal Treasurer and Queensland legislative amendments.

ANZ chief executive officer Shayne Elliott said the bank was considering its options.

“We are naturally disappointed and disagree with the ACCC’s decision. We are closely reviewing the determination and will seek an independent decision through the avenues of review available to us,” Mr Elliott said.

“We believe the acquisition will improve competition, which will benefit Australian consumers, particularly in Queensland. All of the relevant markets are intensely competitive and will continue to be intensely competitive after the acquisition.

“Indeed, the acquisition will create a combined bank which is better equipped to respond to competitive pressures, and deliver significant public benefits, particularly in Queensland.”

Suncorp Group chair Christine McLoughlin said the bank will work with ANZ to take the deal to the independent tribunal.

“When we embarked on this transaction, we were of the firm belief it was in the best interests of our customers, shareholders and employees and that it would provide a net benefit to the Australian economy,” Ms McLoughlin said.

“Together with external economic and industry experts, we determined that this deal would not adversely impact the competitive dynamics in the markets in which we operate,” she said.

“There is nothing we’ve seen throughout the ACCC process that has caused us to change our view on these matters and we believe the Tribunal will accept the merits of our case.

“In fact, the 12 months that have passed since the transaction was announced have only reinforced the rationale for the sale, and the importance of the benefits it will deliver for our stakeholders, the state of Queensland and the broader public.

“Together with ANZ, we will make our case to the Tribunal, which is led by a justice of the Federal Court of Australia. The Tribunal will look at all of the evidence with fresh eyes before forming its own view.”


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