Suncorp adviser claimed merger with Bendigo ‘value accretive’

afr.com:

Suncorp heard from advisers last year that merging its bank with mid-tier rival Bendigo and Adelaide was a valid idea, and better than the insurer running its bank alone, according to the competition regulator’s investigations behind its blocking of the $4.9 billion deal with ANZ.

The claim, included in the Australian Competition and Consumer Commission’s executive summary behind its decision, contrasts with Suncorp declarations that an internal review concluded a tie-up with another regional bank was “inferior” to both the ANZ deal, and persisting with the insurer-bank model.

Suncorp and ANZ’s plan for a $4.9b deal has been rejected by the ACCC.  

The ACCC blocked ANZ’s proposed buyout on Friday after raising concerns about the impact on competition in home loans. Its full reasoning will be published by the ACCC on Monday.

ANZ, with Suncorp’s backing, is appealing to the Australian Competition Tribunal, in a process that could take around six months.

The ACCC’s summary was informed by statements from bank executives under oath, and outlines that the sale’s genesis came from Suncorp’s desire to become solely an insurer. Suncorp had sought to overcome a “conglomerate discount”, with the market valuing the organisation at less than the sum of its banking and insurance parts.

While a cash sale to ANZ would realise “the largest financial benefits to its shareholders”, the ACCC summary said Suncorp, in undertaking a valuation assessment last year, received external advice on three scenarios: a cash offer from another major bank, merging with Bendigo and Adelaide Bank, or retaining the banking arm.

“The second-best option to the ANZ offer was a merger with a regional bank, with Bendigo and Adelaide Bank the preferred partner,”