The ANZ Group Holdings Ltd (ASX: ANZ) share price is down 3% after it was authorised to buy the banking division of Suncorp Group Ltd (ASX: SUN).
Acquisition authorised
The Australian Competition and Consumer Commision (ACCC) had previously blocked ANZ’s efforts to acquire Suncorp Bank.
But today, the Australian Competition Tribunal (ACT) has decided to authorise the proposed acquisition of Suncorp Bank.
It’s not a done deal yet – completion of the acquisition remains subject to legislative amendments by the Queensland Parliament and approval by the Federal Treasurer.
The ANZ CEO Shayne Elliott said:
This is a significant milestone and an important step forward in the process, however we still have further conditions to meet. We remain committed to completing the acquisition as soon as possible once all sale conditions are met.
Suncorp Bank is a high-quality business with a strong team and excellent customer base, and we look forward to bringing them access to the best of ANZ, including our platforms and technology. We strongly believe that the acquisition presents significant opportunities for ANZ, Suncorp Bank and our customers, as well as major public benefits including for Queensland.
What is the acquisition cost?
In 2022, the major bank announced it was buying Suncorp Bank or $4.9 billion. The majority of this funding is from the issue of new ANZ shares.
ANZ said there won’t be a change to the total number of Suncorp Bank branches in Queensland for at least three years from completion.
At the time of the announcement, ANZ was buying $47 billion of home loans, $45 billion of deposits and $11 billion of commercial loans.
It also said it would allocate $15 billion of new lending as part of ANZ’s existing renewable lending commitments to support Queensland renewable projects and green Olympic Games infrastructure as well as $10 billion of new lending for energy projects particularly those targeting bioenergy and hydrogen over the next decade.
At the time, ANZ said it had licenced the Suncorp Bank brand for five to seven years.
Final thoughts on ANZ shares
Perhaps unsurprisingly, the Suncorp share price has gone up 6% – investors seem to think the Queensland business is getting a good deal.
I don’t think buying Suncorp Bank will necessarily improve ANZ dramatically, but it will add scale. I think it’s important that ANZ continues improving its customer service and technology offering.
I’m not optimistic about solid long-term profit growth for the banks because of competition, there are other ASX dividend shares that could offer better yields.
