Australia and New Zealand Banking Group Ltd (ASX: ANZ) has set its sights on buying the bank division of Suncorp Group Ltd (ASX: SUN). But, with such a big acquisition, will the Australian Competition and Consumer Commission (ACCC) stop it from going ahead?
ANZ is already one of ASX's big four banks, along with Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC).
The ACCC's purpose is to "promote competition and fair trading and regulate national infrastructure to make markets work for everyone."
ANZ already holds a strong market position and it's proposing to take out one of the main second-tier competitors.
Some other banks have previously been approved for acquisitions. For example, NAB has bought Citigroup's Australian consumer business.
If the proposed $4.9 billion Suncorp Bank deal is to go ahead, then it will need the stamp of approval of the ACCC's new boss, Ms Cass-Gottlieb. She is the first female chair of the ACCC.
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ANZ thinks it will get the green light
The big four ASX bank may not have pursued this deal if it didn't think it was going to get through the ACCC.
The Suncorp and ANZ Media Conference gave ANZ management a chance to comment on various aspects of the deal, including potential concerns about competition.
ANZ CEO Shayne Elliott said:
We're very confident we're going to get a fair hearing. We've got a case. We think we can make a really strong case that this is in the interests of consumers, and that this is in the interests of competition. And you know, we look forward to making it. We will work through that over the coming months.
So, not only is ANZ suggesting that it won't decrease competition, but it could actually be a boost for competition with a stronger ANZ able to essentially challenge others in the sector.
The ANZ leadership also suggested that how the financial sector has changed over the years should be taken into account, with banks no longer necessarily controlling the end-to-end process.
Paul O'Sullivan, the chair of ANZ, commented:
I think just to add to that, you know, the definition of financial services is changing very quickly. Whereas over 10 years ago, you just talked about the major banks and they did everything, end to end. Increasingly what you're seeing in the sector in the disaggregation value chain. Where companies are coming in with startup ideas and innovation at different points in informatics dimension by now. So, I think the definition of the market, the definition of competition has changed dramatically. I think that would be a factor in any valuation model.
ANZ able to compete on loan processing
Regardless of whether this deal goes ahead, the big four ASX bank was pleased to tell investors about improvements it has made to its loan processing times. This was announced in a trading update.
It said that adding operational capacity and processing resilience in its Australian home loan business has helped deliver "consistently faster turnaround times across all channels, and we are in line with major peers for our key customer segments." Lending volumes grew by $2 billion over the three months to 30 June 2022, which was an annualised growth rate of 3%.
ANZ said it's on track to grow in line with the Australian major banks before the end of the financial year, and it's delivering growth "with an eye to maintaining margin performance and credit quality".
ANZ share price snapshot
While ANZ shares are currently halted, the ANZ share price is down around 25% over the last six months.
