S&P sees benefits to ANZ takeover of Suncorp Bank
S&P Global Ratings believes ANZ proposed takeover of Suncorp Bank will boost ANZ's competitiveness in the Australian residential lending market, providing it with scale and geographic diversity.
The ratings agency says the proposed acquisition will add about $85 billion in assets to ANZ's balance sheet. These totalled about $680 billion as of May 31, 2022, meaning that ANZ will remain the smallest of Australia's four major banks.
ANZ, which has traditionally been underweight in Queensland, plans to fund the A$4.9 billion acquisition with about $3.5 billion in common equity and the rest by existing capital.
“In our view, the acquisition will strengthen the bank's market position in the higher growth state of Queensland and deliver the group greater scale and improved geographic diversity across the Australian states and New Zealand,” S&P Global Ratings says.
“We project that ANZ will manage its common equity tier 1 (CET1) ratio above 11 per cent from January 1, 2023, when the Australian Prudential Regulation Authority's new capital framework comes into effect. As of June 30, 2022, ANZ's CET1 ratio was 11.1 per cent.”
S&P Global Ratings says it has revised its outlook on Suncorp Bank to positive from negative and affirmed its issuer credit ratings on the company at 'A+/A-1'. “We expect to equalize the ratings on SML with those on ANZ when the acquisition is finalised,” it says.