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Suncorp has accepted a $4.9 billion bid from ANZ to take over its banking business, as the big four bank seeks to accelerate its growth.
Key points:
- Suncorp has accepted a $4.9 billion takeover bid from ANZ for its banking operations
- The deal faces several federal and state regulatory hurdles and is not expected to complete for at least a year
- Suncorp will continue to operate as a purely insurance company
ANZ is on a trading halt while it goes to shareholders to raise $3.5 billion in additional funds to pay for the deal, which is not expected to be completed for at least 12 months as it requires numerous regulatory approvals.
The proposal has to receive clearance from the Australian Competition and Consumer Commission, which has to be satisfied it will not substantially lessen competition in the banking sector.
It will also require approval from the Federal Treasurer, Queenslander Jim Chalmers, as well as legislative changes to Queensland's State Financial Institutions and Metway Merger Act 1996.
"We know there will rightly be questions from government and regulators about the competition aspects of this transaction," acknowledged ANZ chief executive Shayne Elliott in a statement.
According to analysis from RateCity using APRA data, the deal would push a combined ANZ plus Suncorp just ahead of NAB (which recently bought Citi's Australian consumer banking business) as the third biggest of the major banks for home lending.
ANZ plus Suncorp would have 15.4 per cent of outstanding home loans ($307 billion), still well short of Westpac's 21.5 per cent ($430 billion) and the Commonwealth Bank's 25.9 per cent ($517 billion).
The Australian Competition and Consumer Commission (ACCC) said it would likely to be about a month before ANZ submitted a merger authorisation application, and it would closely examine the proposal before making a decision.
"We will carefully consider the likely competitive impact and any public benefits resulting from the proposed transaction on relevant banking markets and consumers," a spokesperson said.
"Our review will consider the likely competitive impact of this transaction on a range of retail and business banking products and services including transaction accounts, term deposits, home loans, personal loans, and small-to-medium business banking.
ANZ talks up Queensland commitment
Given the bank's focus on the Queensland market, and the politics potentially involved, it is not surprising that ANZ and Suncorp are emphasising a continued commitment to that state if the business changes hands to the Melbourne-based big four bank.
"Once completed we will initially run Suncorp Bank as a separate business retaining the current brand," Mr Elliott told banking analysts during a briefing.
In the company's statement on the deal, Mr Elliott committed to maintaining Suncorp's current branch footprint in Queensland for at least three years post completion.
"This is a growth strategy for ANZ and we will continue to invest in Suncorp Bank and in Queensland for the benefit of all stakeholders," he said.
"Suncorp Bank will continue to be led by current CEO Clive van Horen. For team members, it is business as usual with no planned changes to employment conditions and the acquisition will not result in any net job losses in Queensland for Suncorp Bank for at least three years post completion."
Suncorp Group chief executive Steve Johnston said his company's main reason for selling the bank was to focus on its core insurance business.
""The bank has become an attractive asset, with good momentum, a de-risked book and a strong alignment to the high growth state of Queensland," he told analysts, explaining ANZ's interest in the deal.
However, he also argued that customers would ultimately be better off as part of a bigger bank.
"Customers will see benefits including access to a wider range of products and services, and career opportunities will be enhanced for our people," he noted in a statement.
"ANZ is committed to growing its presence in Queensland and I am pleased about the commitments they are making to our customers and employees."
ANZ has promised $15 billion of new lending available for Queensland renewable projects and green Olympic Games infrastructure, $10 billion for new energy projects in the state with a focus on biofuels and hydrogen, as well as $10 billion in lending for Queensland businesses over the next three years.
The big-four bank is selling new shares to fund the deal at $18.90 each, a 12.7 per cent discount to the most recent closing price.
The proposed takeover is only for Suncorp's banking business and the Brisbane-based company would continue to own and operate its insurance operations, which include the AAMI, GIO, Shannons, APIA and Vero brands.
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