Daily Flows
- Market participants are continuing to increase their exposure to longer-term fixed products, taking into account future declines in interest rates.
- We have already observed longer rates dropping from highs of 5.40%. However, opportunities still exist, with rates at 5.19% for a 5-year term deposit and 5.06% for a 4-year term deposit from an ‘A’ rated counterparty.
- NCD activity has shown two-way flows, resulting in stable margins at +40/+45 for 3 months from domestic offerings.
Two Sides of the Coin For The ANZ-Suncorp Proposed Deal
- Today, the Australian Competition Tribunal is expected to decide the outcome of the ANZ $4.9 billion takeover offer for Suncorp Bank.
- Currently, the decision appears finely balanced and difficult to predict.
- On one hand, if ANZ proceeds with the deal, Suncorp Bank would likely maintain its A+ credit rating, as the transaction and scale benefits would offset the loss of its insurance arm. However, the ACCC argues that this would further reduce competition in a banking system where the big 4 hold 80% of mortgage loans.
- On the other hand, if Suncorp is absorbed by a regional bank, it is argued that competition would increase. However, Suncorp Bank would suffer as it loses its A+ credit rating and faces increased funding costs.
- Decreased competition in any system is detrimental to the end consumer as it diminishes price tension. This decision is also coming to front in the context of recent APRA liquidity changes that potentially reduce competition futher as MLH banks may have to consider merging in order to manage the regulatory changes.