ANZ’s Capital Notes 9 Success and Suncorp Takeover Bid

ANZ’s recent issuance of Capital Notes 9, with a 2.9% + 3 BBSW margin and a total issuance of 1.7 billion AUD, has seen strong demand, reaching $3.2 billion, later scaled back to 800 million. The remaining 900 million in issuance comes from the rollover of ANZ Capital Notes 4 holders. This positive reception aligns with the trend of Big 4 banks boosting CET-1 ratios, suggesting ongoing strength amid widening credit spreads.

Beyond ANZ’s Capital Notes, it signals optimism for a major venture—their bid for Suncorp Group. The $4.9 billion takeover, initially blocked by the ACCC, has been approved by the Australian Competition Tribunal. This decision, citing Macquarie Group Bank’s role as a more significant player, may spark discussions on Australia’s merger laws.

Banks pursue acquisitions for enhanced profitability, prompting focus on Suncorp Group’s decision to sell. Suncorp cites industry pressures, stating their regional banking arm is a distraction needing urgent capital.

The Common Equity Tier 1 (CET-1) ratio, mandated to be above 8%, serves as a crucial indicator of a bank’s financial robustness, reflecting its core equity capital as a percentage of risk-weighted assets.

Suncorp Group maintains a healthy CET1 ratio of 10.39%, reinforcing its appeal. ANZ, with the highest CET-1 ratio among the Big 4 at 13.30%, showcases financial strength, highlighted by the success of ANZ Capital Notes 9.

For Suncorp Group Capital Note holders and shareholders, positive CET-1 ratios from both ANZ and Suncorp indicate a secure position in a potential takeover. This confidence is reflected in the rise of Suncorp Capital Notes 4 by 0.34%, trading at $101.960. A successful deal could further increase this value.

The decision now rests with Treasurer Jim Chalmers, with the market anticipating a favourable outcome, evident in a 6% rise in Suncorp Group’s stock.