Big bank ANZ this week unveiled a $4.9 billion takeover of Suncorp’s banking arm. Several battles loom ahead to win over customers as well as regulators.
, who fear more regional banks could be swallowed up if regulators approve this deal. Others say banking competition – better prices and services – mostly comes from outside the majors.a $4.9 billion cash offer for Suncorp’s bank
More importantly, Melbourne-based ANZ would overtake rival National Australia Bank and become No 3 in terms of home loans, with a book of $307 billion, as its market share jumps from 13 per cent to 15 per cent. Suncorp, meanwhile, says the deal will allow it to focus harder on its insurance business, whose brands include AAMI.But ANZ and Suncorp have several battles ahead.
Even Suncorp’s bank was nearly sold in a shotgun marriage then to ANZ, which internally dubbed the project “Protea”, after a flowering plant. Those merger talks were still scheduled the day the federal government announced a life-saving guarantee of funding lines in October 2008. One Suncorp veteran recalled waiting for ANZ counterparts that Sunday morning in a Sydney building, only for them to never show up.
The purchase is what ANZ described as a “high quality” franchise. Suncorp’s net promoter score, a measure of people’s willingness to disparage or recommend a bank, was +15, much stronger than ANZ’s retail division in Australia’s NPS result of negative 4.3 last year. “There is an idea that this deal will sail through, but I think it reduces competition,” says veteran banking analyst Brian Johnson from Jefferies.
But one senior competition lawyer, not involved in the deal, points to the ACCC’s residential mortgage market inquiry from December 2020, which observed major banks “have exhibited signs of oligopolistic behaviour and demonstrated a lack of vigorous price competition when setting their home loan interest rates”. Any takeover of a regional bank doing reasonably well should raise ACCC eyebrows, this lawyer says.
The current Suncorp, an insurance and banking conglomerate, was formed in 1996. It was the merger of Queensland state-owned entities QIDC and insurer Suncorp with the listed Metway Bank. That fusion stemmed from a knife fight between corporations and politicians. “We all met well into very, very late one night [on the] top floor of the parliamentary annex,” Borbidge says. Ultimately, they accommodated the concerns.
But questions have often surrounded the rules. Former Suncorp managing director Patrick Snowball, a former British tank commander turned insurance industry veteran, was known to have an affinity with Sydney. He got remarried in NSW’s capital and while following his son’s boating expedition while managing director, Snowball referred in an online post to the sailing conditions, saying it “even makes us Sydneysiders jealous”.Treasury bureaucrats, meanwhile, noted potential loopholes.
Another question surrounds the laws tied to the banking arm. If only the insurance arm is left, what enforcement mechanism ensures that Suncorp headquarters remain in Queensland? Suncorp declined to answer. “The outcome of the merger will be better deals for customers, more access to capital at a better price than we would be able to deliver alone. We are confident we will get a fair hearing and that is all we can ask for.”
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