ANZ-Suncorp merger deal: little banks have a big role to play in creating a fair market

Dr Angel Zhong, Associate Professor of Finance, RMIT 

Topics: banking, monopoly, merger, ACCC, ANZ, Suncorp  

“The competition watchdog the Australian Competition and Consumer Commission (ACCC) has rejected the ANZ-Suncorp merger deal. The $4.9 billion deal could have been one of largest deals in Australian banking history.

"The ACCC blocked the deal as it substantially lessens competition in the Australian banking industry, which is not in the public’s interest.

“Australia has one of the world’s most concentrated banking sectors, with its four biggest banks – Commonwealth Bank, National Australia Bank, Westpac and ANZ – holding more than about three-quarters of the market.

“It will become even more concentrated if the deal goes ahead. Suncorp is the second largest of Australia’s four major regional banks.

“Smaller banks in Australia will find it harder to compete in the already highly concentrated market, with the big banks becoming even bigger.

“In the Productivity Commission’s recent inquiry into Australian banking business, it found that Australia’s major banks had charged prices above competitive levels, offered inferior quality products, and had acted to inhibit the expansion of smaller competitors.

“The lack of competition has exacerbated the pain felt by Australian households in the rapidly rising interest rate environment, where many are struggling with hikes in mortgage repayments. This relates to the heart of the issue, which is a cosy banking oligopoly.

“Keeping smaller banks in the market is crucial from a competition perspective as they introduce diversity and promote innovation, driving larger banks to improve their offerings and services.

“Smaller banks also create more options for consumers, leading to better pricing, enhanced customer service, and increased overall market efficiency.”

Angel Zhong is a finance academic who specialises in empirical asset pricing, digital finance, global financial markets, investor behaviour and the recent trends in retail investing. 

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