Be wary what you wish for: an aphorism that applies in the case of Suncorp’s desire to sell Suncorp Bank to ANZ.
In the second afternoon of the Australian Competition Tribunal’s review of the ACCC’s refusal to authorise a merger first proposed 17 months ago, Suncorp’s barrister Cameron Moore painted the banking business of his client in a very poor light.
This transaction concerns “a very small participant in the banking sector – one that accounts for 1.7 per cent of system assets,” Moore told the Tribunal.
“Some of Suncorp’s competitors have significant cost advantages, because of Suncorp’s legacy branch network and legacy platforms.
“Suncorp has no particularly unique advantage that gives rise to a strong competitive position.
“Until recently Suncorp was losing a significant amount of its market share.
“Current management has managed to arrest that … and even increased it [a little].
“But what one cannot say is that it has some competitive leading edge that allows it to out-compete, in Queensland or anywhere else.”
Moving on to consider Suncorp Bank’s product range, Moore said: “They need a full range of business banking products, and Suncorp cannot offer a full range.
“And nor can they satisfy businesses of a certain size.”
ANZ, Moore assured the Tribunal, “is not buying Suncorp to dismantle it. Certainly the intent is to keep the brand operating for some time, to preserve the benefits of the business in ANZ.”
ANZ will licence the Suncorp Bank brand for five to seven years, under current plans.
Previewing the competition themes the Tribunal must consider, Moore said: “The real question or competitive analysis is: is there anything about this transaction that leads to a change in the structure in the market?
“Does it allow any bank to charge less, or more?
“We say the ACCC's static analysis is erroneous.
“Both the ACCC and Bendigo seem to give Suncorp an outsized significance.”
In the ACCC counterfactual, Bendigo and Adelaide Bank would eventually step up to negotiate a merger with Suncorp Bank, once ANZ was seen off following an adverse ruling by the tribunal.
But, “no transaction would be approved by the board of either company,” Moore insisted, arguing it would not be value accretive for either shareholders of Suncorp or Bendigo.
“Any [such] merger would not enhance competition to any extent.”
On the other hand, Moore’s argument made plain, Suncorp will not be in any position to credibly continue to operate Suncorp Bank if the ANZ deal falls through. The sale of Suncorp Bank to any willing buyer is inevitable, on the best terms Suncorp can get.
“Suncorp, we say, does not have any features or advantages that cannot be matched by other competitors,” he said.
“In addition to Suncorp being really small, Suncorp’s offerings are not unique.”
The hearing resumes on Thursday.