Proposed acquisition is "anti-competitive," expert says
The Australian Competition and Consumer Commission should block ANZ’s $4.9 billion acquisition of Suncorp Bank because the deal will damage competition, according to a finance sector expert.
Bryan Johnson, analyst at investment bank Jeffries, has sharply criticised the deal, which he believes would significantly lower competition by removing Suncorp as a provider of loans and banking products, according to The Australian.
“We believe ANZ’s proposed acquisition of Suncorp Bank is anti-competitive,” Jeffries wrote in a client note. “Specifically, ANZ’s smaller housing book has not precluded ANZ from offering the cheapest variable-rate/biggest mortgage cashback.
“Incremental housing price competition comes from the broker channel where ANZ and Suncorp Bank are more reliant.”
Johnson said ANZ sourced about 52% of its loans from brokers, compared to 46% for Commonwealth Bank, 44% for NAB and 45% for Westpac.
Suncorp sources about 75% of its loans from the broker channel, The Australian reported.
“While Westpac differentially price home-loan brand pricing through brokers, an incumbent major bank assuming control of a product supplier could reduce competitive pricing tension,” Johnson wrote in the note. He said that after Westpac acquired St George and CBA purchased Bankwest, the sector was hit by “long absent” out-of-cycle mortgage rate hikes.
Last month, the ACCC called for submissions on the ANZ-Suncorp deal by Jan. 18 and indicated it would make a decision by June, The Australian reported.
Mark Nathan, of Regal Funds Management, told the publication that there was evidence both for and against the acquisition.
“We saw the Telstra and TPG [network] deal get knocked back, so they [the ACCC] are not scared to come out and have a fight – although their track record of winning fights, I gather, is not particularly good,” Nathan said.
Read next: ANZ-Suncorp Bank merger criticised
The ACCC’s decision in the Telstra deal is being appealed, The Australian reported. In 2020, the regulator’s decision to block a proposed merger between TPG and Vodafone was overturned by the Federal Court, which ruled the deal wouldn’t substantially damage competition.
The ANZ-Suncorp deal requires the approval of the ACCC, as well as approval from the federal and Queensland governments, The Australian reported.
Queensland Treasurer Cameron Dick said last month that the state was engaging with both ANZ and Suncorp on the proposed merger.
“Any transaction must deliver for Queenslanders, particularly when it comes to skilled jobs and economic prosperity,” he said.
As part of the deal, ANZ has committed to no net job losses at Suncorp Bank in Queensland for three years, and has pledged not to close any Suncorp branches over the same period. However, it has not made the same pledge regarding its own staff and branch locations.
The proposed merger has drawn criticism within the sector. Last month, Bendigo and Adelaide Bank managing director Marnie Baker slammed the deal.
“[It will] concentrate market share and hand a commanding position in the Queensland market to a big four bank,” Baker said. “It will further entrench Australia's banking oligopoly.”
Have something to say about this story? Let us know in the comments below.
