The competition regulator has suggested the Brisbane-based company could merge with a similar-sized peer instead of sell its banking division to ANZ.
Suncorp’s internal forecasts suggest a merger with the Bank of Queensland or Bendigo and Adelaide Bank would not be in the best interest of its shareholders and would likely produce limited synergies for the combined group.
ANZ chief executive Shayne Elliott has one week to convince the competition regulator to allow his company to acquire Suncorp’s banking business.
Suncorp, which comprises banking and insurance, is understood to have run the scenarios around merging two banks with a return on equity of around 7 per cent and determined it did not stack up. It is also not interested in a deal under which it would not be able to pay out shareholders in its insurance business with cash. ANZ’s $4.9 billion cash offer, funded through a $3.5 billion equity raising, will deliver about $4.
Separately, ANZ is expected to argue that the mortgage market – described as the most competitive – and deposit rate setting are not the same as they were in 2018, when the Productivity Commission ruled “that large financial institutions, particularly in banking, have the ability to exercise market power over their competitors and consumers”.
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