ACCC decision to deny deal 'boosts competition'
Non-major banks Bendigo and Adelaide Bank and Auswide Bank have responded favorably to the regulator’s decision to block the $4.9 billion ANZ-Suncorp Bank deal.
The outcome maintains the balance of competition between major and non-major banks, and is therefore positive for consumers, they say.
Following comments from the Australian Competition and Consumer Commission that an ANZ acquisition would remove potential for a deal with Bendigo and Adelaide Bank, Australia’s largest non-major bank is now viewed as a possible contender.
Bendigo and Adelaide Bank has not commented on whether it will pursue a transaction, other than to voice its support of the ACCC’s decision.
Bendigo and Adelaide Bank, Auswide Bank support ACCC decision
Announcing that the ACCC would deny authorisation for ANZ to acquire Suncorp Bank, ACCC deputy chair Mick Keogh said on August 4 that second-tier banks such as Suncorp Bank were “important competitors” against the major banks, noting that barriers to new entry at scale into banking were “very high”.
The proposed acquisition of Suncorp Group’s banking arm by ANZ Banking Group would “further entrench an oligopoly market structure that is concentrated”, dominated by the four major banks, he said.
Bendigo and Adelaide Bank managing director and chief executive officer Marnie Baker (pictured above left) told MPA that the bank acknowledged and supported the ACCC’s decision.
“We believe it’s a good outcome for competition, customers and the community,” Baker said.
She noted that when making its decision, the ACCC said that non-major banks were both an important source of competitive pressure and a competitive threat to major banks.
“Bendigo and Adelaide Bank is proud to be an independent regional bank. We remain focused on our strategy and our purpose of feeding into the prosperity of our customers and their communities, not off them,” Baker said.
Auswide Bank chief customer officer Damian Hearne (pictured above right) said that the big four banks enjoyed “enormous advantages” in Australia’s financial system, including in the areas of brand awareness, scale and access to government and agencies.
“Our system is concentrated and I don’t think further concentration is good for customers and competition in the long run,” Hearne said.
Acknowledging that mergers often come with short and medium-term promises, Hearne acknowledged that if the transaction were to proceed, Suncorp Bank customers would eventually become ANZ customers.
He noted that a merger would likely be beneficial to ANZ in cementing further scale and market advantage over a period of a few years but said that it would be less ideal for smaller competitors and Australian banking consumers.
Smaller banks, along with credit unions and mutual banks generally offer lower-priced home loans and better priced deposits than major players, despite not having the scale, he said.
“Being a smaller bank means we can offer customers more competitive interest rates and better home loan features because our overheads and operating costs are lower,” Hearne said.
“We also have far less red tape when it comes to assessing home loan applications and, unlike many banks, we don’t believe a computer should decide whether [a] client is suitable for a home loan.
“Instead, we carefully assess each application on its individual merits.”
Hearne said that the home loan market had been highly competitive, particularly over the 2023 financial year, which he said had seen a rapid increase in wholesale funding costs and retail deposit rates.
Auswide Bank continues to ensure its home loan pricing provides great value, particularly when considered alongside flexibility and features. The latest net promoter score of +31 and customer satisfaction of 97% sets the bank apart, he said.
“Simply we have to work harder and provide a reason for brokers and customers to choose us over a big bank,” Hearne said.
Keogh said on August 4 that the regulator was not satisfied that ANZ’s acquisition of Suncorp’s banking arm would not lead to reduced competition in home lending nationally, or in business banking and agribusiness markets in Queensland.
“These banking markets are critical for many homeowners and for Queensland businesses and farmers in particular,” Keogh said.
“Competition being lessened in these markets will lead to customers getting a worse deal.”
Market competition high, NAB tells House of Representatives Standing Committee
Speaking to a House Standing Committee on Economics on July 12, before the ACCC’s decision on the ANZ-Suncorp Bank deal was released, NAB CEO Ross McEwan and NAB group executive of personal banking Rachel Slade commented on the level of competition in the market.
“I have been in the business for a while in Australia and overseas, and I am not too sure I have seen a market as competitive as the one we are seeing now for customers making proactive contact with us, and 70% through a broker market,” McEwan told the committee.
Commenting on market operations, Slade said that the bank had never seen a more competitive home lending market, adding that she had never seen customers “so engaged with their finances”, particularly with their home loans.
“At least two things are going on for customers. The first would be our customers who took up a shorter term, fixed rate offering in the last couple of years; as they are rolling off, they are engaging with their bank on what that new price is,” Slade said on July 12.
“Secondly, with 12 interest rate rises, any customer who is on a variable-rate product will have been contacted by their bank regarding interest rate changes.”
NAB had held pricing conversations with over a third of its customers over the previous six months, a practice that Slade said that she expected to continue. Customers therefore did not need to be prompted to be active in the market, she told the committee.
Bendigo and Adelaide Bank chair and independent director Jacqueline Hey told shareholders at its November 2022 AGM that Suncorp Bank had avoided engagement with the bank despite repeated approaches, instead announcing a transaction with a big four bank.
ANZ to seek independent decision
Responding to the ACCC’s decision, ANZ CEO Shayne Elliott said in a statement on the bank’s website that the bank was “disappointed” and that it “disagreed with the decision”.
ANZ would review the determination closely and would seek an independent decision through the avenues available, he said.
What do you think about the ACCC’s decision to deny authorisation of the ANZ-Suncorp Bank deal? Share your thoughts in the comments section below.
