The ANZ PR machine has forceful, via Bluenotes and national media, over the value the bank plans to deliver following the long-expected final approval – from the Treasurer, on Friday – for ANZ’s takeover of Suncorp Bank.
At Bluenotes, Daniel King, managing director for Suncorp Integration at ANZ wrote that “at its core this is a whole-of-bank transformation – across Commercial, Retail and Enablement functions – requiring the entire ANZ village to work together if it is to land successfully.
“Shared accountability becomes paramount due to the interconnected nature of tasks and the potential domino effects of decisions made at various levels.”
While King’s boss, ANZ CEO Shayne Elliott, voiced the expected sentiments in media interviews on Friday, with an emphasis on the underling work ahead representing a “migration” of Suncorp customers to the newly developed ANZ Plus platform, rather than an integration, ANZ’s board and management must face the lessons from Australian banking history.
The two most relevant comparators are Westpac’s 2008 takeover of St George Bank and Commonwealth Bank’s hasty takeover (which was really a rescue) of Bankwest later that year.
APRA’s monthly banking statistics show that in the case of both Westpac/St George and CommBank/Bankwest, the market share acquired simply leached away.
On figures from RateCity, an ANZ-Suncorp group is on track to become the third largest banking group, with just over 14 per cent of households' savings, and a 16 per cent share of the home loan market. This would push NAB into fourth spot on these crucial retail banking markets (13.8 per cent and 14.5 per cent, respectively)
The sweeteners announced by ANZ in 2022 have been retained: a promise not to close any branches in Queensland, or elsewhere in Australia, along with no net job losses for Suncorp Bank for three years post completion will calm customers and bank staff.
ANZ also seems to have given itself some wriggle room on another key item – the expectation that it would team up with Australia Post to offer some of its services via the Post Office network. Instead, ANZ restated its previous position, that is, to "continue its ongoing best efforts to reach an agreement with Australia Post, on a commercial basis, to offer Bank@Post services to its customers".
One other major aspect of this deals seems to have slipped under the regulators' radar – namely the pricing mechanism. The previously agreed price of $4.9 billion – and which will stand, with minor changes – was calculated as 13.8 times Suncorp Bank's unaudited 2022 earnings of approx $355 million (after allowing $13m for distributions on Suncorp Bank's ATI capital notes).The following year, Suncorp Bank's after tax earnings jumped to $470 million, although the bank's outlook for 2024 is decidedly less rosy, posting $192m in after tax profits for the first half of FY24, down 25 per cent on the comparable period in FY23.
ANZ will also acquire Suncorp Bank’s ATI capital notes at face value ($600m as at June 2022).