ANZ/SUN Marital Background:

In July 2022, Suncorp announced that they had come to an agreement to sell the Suncorp Bank to ANZ, conduct a $3-3.50 capital return to shareholders and become a pureplay insurer. Atlas saw this as a win-win for both companies as it freed up regulatory capital for Suncorp’s insurance business, and ANZ received a bigger mortgage portfolio. Both ANZ and Suncorp are held in the HNW Growth and Income Portfolio.


In August 2023, The Australian Competition and Consumer Commission (ACCC) blocked the acquisition on the basis that the $5 billion acquisition was likely to substantially lessen competition across the supply of home loans nationally, small and medium enterprise banking and agribusiness banking in Queensland.


Today, the Australian Competition Tribunal (ACT) overturned the ACCC’s decision to reject the ANZ – Suncorp Bank merger, citing that there are major banks with higher market shares, Macquarie’s ability to create more competition and increased use of mortgage brokers facilitating greater customer switching.


It makes sense that the deal was allowed to go ahead, with the combined ANZ-Suncorp Bank mortgage market share of 16% still behind that of CBA (25%) and Westpac (21%). Suncorp also wanted to sell the bank, with the only buyer outside of ANZ being Bendigo Bank, which has a market cap the same size as ANZ’s cash offer. Bendigo Bank’s proposal to give Suncorp Bendigo Bank shares in exchange for their bank was manifestly inferior to ANZ’s offer of cold hard cash.


Atlas maintains the view that this deal is a win-win for both companies as it frees up regulatory capital for Suncorp’s insurance business, and ANZ receives a bigger mortgage portfolio predominately in Queensland, where they have a low share.


Suncorp finished up +6% to $15.29, following the cash from the deal being used for a shareholder return.   


ANZ finished down -2% to $27.88, as investors believed the capital would be used for share buybacks if the deal didn‘t go through. ANZ raised this cash close to 2 years ago, in August 2022, at $18.90, and the Portfolio participated in the raise.