Selling its banking business to a regional competitor would require branch closures and other cost cuts, Suncorp says
The sale of Suncorp’s banking business to a regional bank would require job cuts and branch closures in order to be commercially viable, according to an internal analysis.
The analysis was part of a submission by Suncorp chief executive Steve Johnston to the Australian Competition and Consumer Commission as the regulator considers ANZ’s proposed $4.9 billion acquisition of the bank, The Australian reported.
According to the analysis, cost savings of between 35% and 40% would be needed in order to make a deal with a regional bank commercially viable. Suncorp argued that this would significantly undermine any competitive benefits from a deal to create a “super-regional bank.”
A larger bank like ANZ, Suncorp said, can spread the cost of a transaction around. The analysis explained why Suncorp has been reluctant to pursue a merger with Bendigo and Adelaide Bank, which has also made overtures to purchase the banking business, The Australian reported.
The submission seeks to head off talk of a Bendigo deal or purchase by the Bank of Queensland as the ACCC considers alternatives to the ANZ deal.
Branch closures
Johnston said in the submission that Bendigo had made another approach to buy Suncorp Bank three weeks after the deal with ANZ had been entered into, The Australian reported. However, the submission argued that a deal with Bendigo wouldn’t make sense given the high level of cost savings needed to make such a merger viable. That would include the need to close as many as 55 branches, according to Suncorp.
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ANZ has pledged no Suncorp branch closures for at least three years and has promised that the deal would not result in any net job losses in Queensland. It has also signed a deal to keep the Suncorp brand, The Australian reported.
Deal criticised
The deal has attracted criticism from both consumer groups and the broader banking industry.
Bendigo bank managing director Marnie Baker recently said a tie-up between ANZ and Suncorp would be bad for competition.
“If successful, this acquisition 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, which invariably leads to suboptimal outcomes for customers and communities.”
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