BoQ to raise market power concerns over ANZ-Suncorp deal

Bank of Queensland is expected to warn that ANZ’s planned $4.9 billion purchase of Suncorp’s bank will further entrench the major bank oligopoly in Australia, by removing a regional bank from the market.

As the Australian Competition and Consumer Commission (ACCC) reviews the deal, a BoQ source not authorised to speak publicly said the bank’s submission to the regulator would point to several effects that the merger would have on competition.

Following blunt criticism of the deal from Bendigo and Adelaide Bank, BoQ is expected to argue that if ANZ is allowed to buy Suncorp’s bank, it will further consolidate the power of ANZ in the Australian market.

More broadly, the regional lender is expected to say the merger would entrench the big four bank oligopoly, and to highlight challenges that regional banks face in trying to compete with their larger rivals.

ANZ’s plan to buy Suncorp’s bank – which stands to be the biggest banking deal since the global financial crisis – is being assessed by the ACCC this year, with a decision expected around mid-year.

In its submission late last year, ANZ argued the merger would allow it to more efficiently invest in digital transformation, and sought to play down the gains in its market share. ANZ’s submission denied that ANZ held any market power in mortgages, saying its market share in home loans was 13.02 per cent and Suncorp’s was only 2.39 per cent.

ANZ also maintained the deal would allow it to better compete in a market where there is a “credible threat” from new competitors, such as digital-only neobanks.

BoQ – which bought second tier lender ME Bank in 2021 – is expected to challenge the claim that the prospect of new competitors is a meaningful constraint on the big four.

BoQ is also expected to argue that even if ANZ only expands its market share modestly through the deal, competition between the big four and regional banks is held back by regulatory settings. Regional lenders have long maintained they are disadvantaged by rules that allow their larger rivals to set aside less capital against mortgages because they have more sophisticated risk systems, for example.