Big banks set to defy ACCC on Citi

Buyers are circling Citi’s business, and two of them are big four members

Big banks set to defy ACCC on Citi

When ACCC chairman Rod Sims said that “there would certainly be competition concerns” if one of the big four swooped on Citibank’s announced sale, he certainly gave everyone no doubt that the ACCC would take the matter seriously. “It's something we're going to take an extremely close interest in," he continued.

But it seems like ACCC attention isn’t enough to stop either ANZ or NAB dipping their toes in the water to check out the potentially juicy addition to their businesses.

Bloomberg has identified that both of the big four’s smallest members are already in talks with Citi, joining ING, Macquarie, BOQ and Suncorp as potential suitors. Negotiations are moving rapidly, with non-binding bids expected before the end of the month, and a decision being made as quickly as July.

NAB boss Ross McEwan hasn’t made a secret about the bank’s interest in Citi. When questioned by a parliamentary committee last month he refused to rule out a Citi takeover.

"Our strategy today is to grow through our own activities, but you know, every business, be it a bank or anybody else would look at areas that might add to the customer services and make it more efficient," he said.

Although Citi’s credit card business may be the main area of ACCC concern (Citi is Australia’s 5th biggest player) mortgages must be a serious consideration too. Even though the size of Citibank’s home loan business has slipped, and it is now the 21st biggest player in the country, competition for third and fourth place is extremely close – ANZ has just overtaken NAB as Australia’s third biggest lender – and who wants to be fourth of the big four?

Citibank by the figures

5th biggest player in Australian credit card market with around 12.6%

$6.6 billion in housing loans

36 years in Australia

1200 employees nationally

Top 10 mortgage lenders in Australia by market share

CBA                                     25.7

Westpac                             23

NAB                                     14.7

ANZ                                     14.3

ING                                      2.9

Macquarie                         2.9

Bendigo                              2.6

Suncorp                                2.4

BoQ                                       1.6

HSBC                                     1.23

After NAB’s parliamentary grilling, Sims was explicit enough to say that if NAB, or any of the other Big Four tried to purchase Citi’s business then the ACCC would investigate, and could well block the deal.

"If we take a very close look at something through a public review, then taking a decision to oppose a merger is always an option" he told the ABC.