ACCC unconvinced ANZ-Suncorp deal will deliver public benefits

The competition watchdog is seeking more information on ANZ Bank’s plan to buy Suncorp’s banking unit for $4.9 billion, saying that it remains unconvinced the deal will deliver the public benefits claims put forward by the banking giant.

The Australian Competition and Consumer Commission (ACCC) released a statement on Tuesday about its preliminary views on what would be the biggest transaction in Australian banking since Westpac bought St George – if the deal gets the green light from regulators.

The watchdog’s decision on the deal will be released in the middle of this year, and the ACCC must weigh up whether there is any substantial lessening in competition in banking, and whether that can be offset by public benefits from the merger.

In Tuesday’s statement, the ACCC said second-tier banks such as Suncorp played an “essential role” in competing with the big four, and it would need to consider whether taking out a regional bank could remove a “competitive constraint” on the majors. It is particularly concerned about the deal’s implications on agribusiness banking, small and medium enterprise banking, home loans and deposits.

While the ACCC did not say whether it would be likely to approve or oppose the transaction, it said it was so far unconvinced by ANZ’s claims that the deal would provide public benefits to Queensland, or to prudential stability.

ANZ has argued the broader public would also benefit because the deal would make ANZ a stronger bank, which would allow it to serve customers more efficiently. However, the ACCC said it did not have the evidence to support this claim.

“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 statement said.

The ACCC also said it was not clear whether Suncorp would be a stronger insurer without its banking unit, and it was unclear how any such benefits would be passed on to insurance customers.