ACCC flags doubts over insurance impact from Suncorp bank sale
The Australian Competition & Consumer Commission (ACCC) has doubts over several aspects of the proposed $4.9 billion sale of Suncorp’s banking arm to ANZ, including assertions that insurance customers across the country will benefit from it.
ACCC is also not fully persuaded that the divestment will lead to Suncorp becoming a “stronger insurer”. Suncorp CEO Steve Johnston has previously said selling the bank will allow the Queensland-based financial services group to focus on its larger insurance business, a major player in the personal lines market.
The competition watchdog raised the insurance issues and other concerns, especially in relation to likely impacts on home loans, SME and agribusiness banking, in a statement of preliminary views released today as part of its examination of the deal.
The statement of preliminary views followed a public consultation after ANZ lodged a merger application for authorisation in December last year.
“The ACCC’s preliminary view is that it is not clear whether the proposed acquisition would be likely to overall improve the performance of Suncorp Group’s insurance business compared to a future without the proposed acquisition.,” the statement says.
“The ACCC is also considering the weight that should be given to any such benefits, noting that the extent to which they might pass through to insurance customers is unclear.”
ACCC points out in the statement that Suncorp appears to have successfully operated the dual insurance-banking model for many years, an arrangement that has also led to positive outcomes for the business.
“While it is possible that there may be benefits for the Suncorp Group in terms of increased board focus, there are also possible disadvantages, for example the loss of any synergies that result from the combined business.”
Suncorp and ANZ have responded immediately to the ACCC statement, saying they will address the concerns raised and remain focused on seeing through an agreed transition plan for Suncorp’s banking arm.
Suncorp says the statement of preliminary views released today is part of the standard authorisation process that follows from a merger authorisation application.
“Suncorp maintains the view that the sale of Suncorp Bank to ANZ is in the best interests of its customers, employees, shareholders, the state of Queensland and the nation, and will result in a stronger insurance and banking system in Australia,” it says in a statement.
“If the transaction is approved, Suncorp would become a dedicated insurer at a time when the value of insurance to the Trans-Tasman economy and the public has never been greater.”
ANZ CEO Shayne Elliott says the bank will examine ACCC’s preliminary views in detail and address the matters raised.
Suncorp and ANZ say they still expect to complete the proposed deal in the second-half of this year.
ACCC is seeking submissions to the issues raised in the statement of preliminary views before making its final decision – currently scheduled for June 12 – on whether to approve the deal.
Approvals are also required from the Queensland Government, in relation to the State Financial Institutions and Metway Merger Act, as well as from the Federal Treasurer.
“Our statement of preliminary views outlines the key competition issues we’ve identified to date,” ACCC Deputy Chair Mick Keogh said in a statement today.
“Before we finalise our views, we welcome further submissions from stakeholders and consumers alike on the issues raised.”
The ACCC says it can only grant authorisation if it is satisfied in all the circumstances that either there is not a likely substantial lessening of competition, or that there are likely to be public benefits that outweigh any public detriments.
ACCC says it received several submissions to the public consultation, many of whom raised concerns over the deal.
Aon also made a submission, saying Suncorp will be “more focused” on the insurance industry if it was allowed to sell its banking arm.
“Aon supports the divestiture because we believe this strategic focus will drive needed innovation in the insurance industry to address unmet client needs.”
Closing date for submissions is April 18.
Click here for the ACCC statement of preliminary views.
