Suncorp appears to have shut the door on the prospect of merging its banking operations with Bendigo and Adelaide Bank, despite indications from the competition regulator that its planned merger with ANZ could be rejected.
The Australian Competition and Consumer Commission yesterday extended its timeframe for considering the merger application, after highlighting a string of market segments where a combined ANZ-Suncorp business could impact on banking competition.
The regulator has called for industry stakeholders to respond to a statement of preliminary views it published on Tuesday which included an observation it was not yet convinced about public benefits of the merger advanced by ANZ.
“The ACCC’s preliminary view is that the information currently before it is insufficient to substantiate the nature, likelihood and extent of the claimed public benefits, including ANZ’s estimates of future synergies that will be achieved and claims regarding public commitments to investment in Queensland or improvements in prudential stability arising from the Proposed Acquisition,” the ACCC stated.
The regulator has identified four key market segments where the merger might lead to a diminution of competition: home loans, SME banking, retail deposits and agribusiness lending.
It is also considering how an ANZ acquisition of Suncorp compares – in terms of its competition effects – with a merger between the latter and another regional bank, such as Bendigo.
Suncorp’s board last year refused to engage in merger discussions with Bendigo after receiving several approaches.
In a confidential submission to the ACCC, which was made public on 3 March, Bendigo lays out its case for why merging its operations with the target bank would deliver greater public benefits than the transaction proposed by ANZ.
“Bendigo has a history of innovation in financial services, which has and continues to be a key driver of its effectiveness as a competitor of the Major Banks,” Bendigo said in the submission.
“In the likely counterfactual where Bendigo would acquire Suncorp Group’s banking business, Bendigo would have more resources and scale and be better positioned to continue to innovate and be a more compelling competitive force against the Major Banks.”
In a filing to the ASX on Tuesday, Suncorp appeared to rule out ever doing a deal with Bendigo.
“Suncorp maintains the view that the sale of Suncorp Bank to ANZ is in the best interests of its customers, employees, shareholders, the state of Queensland and the nation, and will result in a stronger insurance and banking system in Australia,” Suncorp said.
“As outlined at the Suncorp Group 2022 Annual General Meeting, Suncorp is of the view that a merger with a regional banking peer would not deliver the same benefits and is inferior to both a sale to ANZ and Suncorp Bank’s own organic plan.”
ANZ boss Shayne Elliott said the merger partners were continuing to do planning work on the integration of the businesses, even though the transaction had not yet secured regulatory approvals.
“ANZ continues its preparations for the integration of Suncorp Bank into ANZ, including work on a joint transition plan agreed with Suncorp,” he said.
“Completion of the acquisition remains expected to occur in the second half of calendar year 2023.”
Elliott said Queensland was thriving and that ANZ was “excited” about opportunities to invest in the state.