ANZ to buy Suncorp Bank for $4.9bn
This will result in a stronger, more balanced bank for customers and shareholders
ANZ has struck a deal to buy Suncorp Bank for $4.9bn, boosting its exposure to the Queensland and NSW markets.
It is the most substantial deal in Australia’s banking sector since 2008 and will allow ANZ to regain a slender lead over rival NAB on housing loans.
But analysts have questioned the timing of the transaction, given the economic outlook.
ANZ will raise $3.5bn to fund the acquisition one-for-15 pro-rata accelerated renounceable entitlement offer.
The banking giant will also pay a further $50m over five years for the use of the Suncorp brand.
Hailing it as a once-in-a-lifetime opportunity, ANZ chief executive Shayne Elliott said Suncorp Bank was a natural fit for ANZ.
“This acquisition is just adding scale to businesses we already have, we know and we love,” he said.
“What we love about this transaction is that every part of Suncorp Bank has a natural home at ANZ. We want all of it.” He said ANZ was acquiring a good bank with a great franchise and a great product. “It’s not about adding complexity, it’s really just about natural scale,” he said. “This will result in a stronger, more balanced bank for customers and shareholders.”
The appeal of Queensland-based operations in particular was the growth opportunity, he said.
“Our business (in Queensland) is really focused primarily around institutional,” he said. “We want to build scale to better compete and provide better opportunities for retail and small business customers for many, many years to come.”
Shayne Elliott
The acquisition is subject to a minimum completion period of 12 months and to certain conditions, including approval from Treasurer Jim Chalmers and the Australian Competition & Consumer Commission. Mr Elliott said he expected to get “a fair hearing” from regulators.
It also requires amendments to the State Financial Institutions and Metway Merger Act 1996, which currently requires that Suncorp’s head office, alongside its key executives, be located in Queensland.
Queensland Treasurer Cameron Dick has already put ANZ on notice over its plans. “We will be driving a hard bargain to ensure the new entity’s
Queensland presence is preserved,” Mr Dick said.
If the deal gets over the line, ANZ will acquire from Suncorp $47bn of home loans, $45bn in deposits and $11bn in commercial loans.
Mr Elliott revealed that investors he had spoken to on Monday had already questioned the timing of the transaction: “Our perspective is it’s the right time because Suncorp Bank is in the best shape it’s ever been in (and) ANZ has got more capacity and capability.”
Jefferies banking analyst Brian Johnson highlighted the execution risk of the deal as the market deteriorates.
“So if you think we’re headed into a more challenging environment, then
now is not the best time (to buy),” he said.
Suncorp CEO Steve Johnston said ANZ had committed to no net job losses and no further reductions in branch numbers in Queensland for at least three years post completion.
Offloading the banking business would allow Suncorp to focus on growing its insurance operations, he said.
ANZ also separately announced on Monday that it had withdrawn from MYOB takeover talks with Kohlberg Kravis Roberts & Co.
Suncorp shares rallied 6.1 per cent to $11.78, while ANZ shares were in a trading halt at $21.64 as it raised capital to fund the deal.