ANZ Chief Takes Shot At Australian Competition Regulator

Post by Sharat on August 6, 2009 · Under Business News, Company News, Mergers & Acquistions, banking · Comment

ANZ chief, Mike Smith has accused the Australian Competition & Consumer Commission (ACCC) and in particular its chief executive Graeme Samuel of making it increasingly difficult for Australian banks to achieve growth in their domestic market.

Immediately following the announcement of a deal to acquire the Asian assets of Royal Bank of Scotland in six countries for $687 million, Mr. Smith expressed his desire to increase ANZ’s presence in Australia.

The chances of ANZ being able to grow in Australia through acquisition or inorganically however appear to be slim, given that ACCC chief Graeme Samuel has ruled out further consolidation between the Big Four banking groups and their regional rivals.

Mr. Smith said ANZ’s joint venture in wealth management with Dutch financial services group ING meant that expansion in the segment would not be possible before 2012, and that options to grow in other business areas were severely limited by competition concerns.

“Our overall market share in Australia is 16 per cent, and that is not enough … we need to build on that. We need to bulk up. I think the issue in Australia right now is competition and the anti-competitive dialogue or muttering or whatever it is that you want to call it coming from the ACCC, I thought they were there to actually look at deals and give a view rather than announce ahead of that what you can and can’t do.” Mr. Smith said.

The comments by Mr. Smith seem to be a clear shot at Mr. Samuel who has on more than one occasion this year expressed hesitancy to approve any attempt by a major banking group to acquire a smaller regional rival.

Earlier in the year Mr. Samuel revealed he had grave reservations over the CBA acquisition of regional lender Bankwest, who at the time was facing serious funding issues at the height of the credit market crisis, and who some feared may collapse. Mr. Samuel said the fear of an imminent collapse drove him to approve the merger.

The competition regulators reluctance to approve further transactions involving a Big Four banking group, has meant that bancassurance group Suncorp has had to shelve its plan to sell off its banking assets and convert itself into a pure insurance player.

ANZ, bid for Suncorp’s banking assets back in October, when Suncorp too was having difficulty raising finance. The bid was rebuffed for being too low, after the government introduced deposit guarantee and a sovereign wholesale funding guarantee.

Mr. Smith said ANZ was now well positioned after widespread changes put in place in its institutional bank, but admitted the opportunities to expand the broader banking business in Australia were limited.

“There are other opportunities and I would like to build the business, but Graeme Samuel seems to have other ideas,” Mr Smith said.

Moody’s last night reaffirmed ANZ’s AA-rating on the back of the RBS acquisitions but affirmed the rating outlook remained negative given the challenging global banking environment.

ANZ has one of the strongest tier-one capital ratios at 9.5 per cent, after the deal, and a capital buffer of at least $4billion after a $4.4bn institutional and retail capital raising over the past two months.

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