ANZ Group Holdings Ltd.’s A$4.9 billion ($3.2 billion) deal to buy Suncorp Group Ltd.’s banking arm was blocked by the Australian regulator, citing competition concerns.
The Australian Competition & Consumer Commission decided not to grant merger authorization for the acquisition, the regulator said in a statement Friday.
“We are not satisfied that the acquisition is not likely to substantially lessen competition in the supply of home loans nationally, small to medium enterprise banking in Queensland, and agribusiness banking in Queensland,” ACCC Deputy Chair Mick Keogh said in the statement.
The bank had agreed in July last year to buy the Brisbane, Queensland based firm’s banking operations in a bid to gain an edge over rivals. Competition has remained fierce in Australia’s mortgage market as interest rates rose over the past year.
“We are naturally disappointed and disagree with the ACCC’s decision,” ANZ Chief Executive Officer Shayne Elliott said in a separate statement. “We are closely reviewing the determination and will seek an independent decision through the avenues of review available to us.”
Read More: ANZ ROE to Gain, Suncorp Linger at 7-10% as Deal Blocked: React
The ACCC noted the deal would reduce competition and increase the chances of coordination between the country’s four major banks in the supply of home loans.
“A substantial lessening of competition in home loans would have major flow-on impacts to Australians with a mortgage,” Keogh said. “More than a third of Australian households have a mortgage, with loans totaling around two trillion dollars, illustrating how critical it is that competition in this market is not substantially lessened.”
Next Steps
ANZ shares climbed 0.8% as of 10:25 a.m. in Sydney, while Suncorp declined 1.6%.
Suncorp said it would fully support ANZ through the next step in the merger authorization process, referring the ACCC’s decision to the Australian Competition Tribunal, according to a separate statement.
More detailed reasons on the decision will be released Monday following confidentiality checks, the ACCC said.
What Bloomberg Intelligence Says
ANZ’s returns should be bolstered by the ACCC’s scuppering of the lender’s takeover of unprofitable Suncorp Bank. It also opens the prospect of a big buyback when ANZ reports full-year results in November — Matt Ingram, senior industry anayst at Bloomberg Intelligence
(Adds Shayne Elliott comment in fifth paragraph, share price reaction in eighth paragraph)
